Issues and procedures for Refund of additional duty: They are in questions and answers format.

Related to the ACT/ Rules:

It isour understanding that such a notification will require amendment to the Customs Act and Rules.
Have there been any amendments to the Customs Act enacted.
There is no amendments to the Customs Act and Rules

The Notification does not state under which Section we are allowed to claim refund of the 4% additional duty paid on import.
The notification is issued under section 25 (1)of the Customs Act 1962.The provision of Customs Act related to refund is applicable to refund of additional duty as per section 8 of the Customs Tariff Act 1975.Therefore ,refund claim can be filed under section 27 of the Customs Act 1962.

Is there a seperate authority within Customs notified to handle these refunds. (like we hv for Drawback of Customs Duty)
No separate authority within the Customs. However,in some place,there is refund section to process refund claim.
Under Customs Refund rules the format for each type of claim is notified. Clarity required on the Form in which such applications have to be made.
The Customs Refund Application (Form) Regulation,1995 and Customs Series Form No. 102 are relevant documents for such claim.

Have the Rules of Unjust enrichment been amended or otherwise it will be impossible to get the refund given the current set of internal guidelines and SC rulings.
No amendments of the Rules of Unjust enrichment(UJE) is required. The conditions of
notification itself take care of UJE. The refund claim of additional duty is to be filed by the importer under section 27(1)(i) of the Customs Act 1962.Subjected to the conditions
of the notification,the refund of additional duty to be sanctioned to the importer by the
jurisdictional Customs Officer.
Where as,under section 27,any person who has borne the
duty incidence have to file refund claim. The any person may or may not be the
importer.
The condition 2(b) of the notification requires that Invoice for sale of
imported goods,shall specifically indicate that no credit of additional duty of customs
levied under sub section 5 of the section 3 of the Customs Tariff Act 1975 shall be
admissible. This condition satisfy requirement under section 28C of the Customs Act
1962.Further,it restricts the passing of additional duty incidence to the buyer of the
imported goods.

Jurisdictional Customs Officer refered in para 2 (c) does it mean that:
there will be centralised process of Refund claims OR
we have to claim at the respective ports at which the goods were imported OR
we hv to claim from the local customs office where the local Sale happens.
The jurisdictional customs officer is the AC or DC(Customs),having jurisdiction
over the Customs port,land customs station or the warehouse where the duty of
Customs was paid as per Regulation 2 of the Customs Refund Application (Form)
Regulation,1995.
Therefore, refund claim is to be filed before jurisdictional customs officer
where duty was paid.

Is there any time limit specified:
for filing of Refund applications from the date of local sales Invoice.
This is gray area. A clarification for time limit is required from the Government.
It should be amended as within six months form the payment of Sales Tax/VAT on the imported goods.
The Notification No 102/2007 does not specify any time limit for filing
refund claim. if any time limit is imposed for filing refund claim ,which is
consequent to the payment of sale tax on the imported goods at the time of
selling goods in domestic market, then, no refund of additional duty can be
availed for the goods sold after six months from duty payment. This is not
the legislator intention.
The additional duty of Customs is not a duty defined in the Customs Act.
The refund of duty under section 27 of the Customs Act is consequent to an order of assessment,which is an import activity.
Where as, the refund of additional duty under present notification is consequent to post import activity of selling imported goods in the domestic market. Both the refund claims arises out of two different situations . Further No UJE provisions are attracted for refund of
additional duty. Then,only provision of time limit under section 27 is attracted, is not legally correct.
As soon as goods are sold in the domestic market on payment of sale tax
and sale Invoice contains evidence of not availing Cenvat and payment of
sale tax,then,the importer is eligible for refund of additional duty of customs.
Hence, no time limit to file refund claim of the additional duty of customs.
It is anticipated that time limit to file refund claim for additional duty is
prone to litigation. Therefore, the above aspect of time limit needs clarification from the Government.
for filing of Refund applications from the date of Import/payment of Customs Duty.
Within six months from the date of duty payment as per section 27(1)(i)(b) of
the Customs Act 1962.The subsection 8 of the section 3 of the Customs Tariff
Act 1975 states that provision of the Customs Act 1962 and rules and regulation
made thereunder relating to refunds also apply to the duty chargeable under the
section 3.
The additional duty of customs is charged under sub section 5 of the
section 3 of the Customs Tariff Act 1975.Therefore provision of section 27 of the
Customs Act are also applicable for refund of additional duty of customs.

Can refunds be filed for imports made prior to the date of this notification but the local sale is happening on or after 14th Sept.
No refund prior to this notification. The notification is prospective .

In the event of the claim being rejected do we follow the same / current process of Appeal or is there some different provision.
Yes, You have to follow current process of Appeal. The claim rejection is also adjudication order passed by the Jurisdictional officer and same can be appealed under Customs Act.
Transction Issues:

In trading Business Margins are very thin. It is therefore a possibility that the Refund amount could be more than the Sales Tax charged:
CST billing at 3%.
CST billing at 1%.
In Business sometimes transactions do happen at negative.
In such cases will the Refund be limited to the amount of Sales Tax charged in the local sales invoice or will we get full refund. Will this be treated as unjust enrichment.
The conditions 2(d) of the Notification 102/2007 says that appropriate sales tax or value added tax is to be paid on the sale of the imported goods. The incidence of paying sales tax is important and not the amount of tax equal to additional duty. Therefore, you will get full refund of the additional duty.
Provisions of UJE is ruled out as discussed earlier.
In on going transactions where imports happen repeatedly it is almost impossible to have a one to one relation between the specific item imported under a Bill of Entry and a local Sales Invoice.
Is a one to one corelation required to claim Refund.
Yes ,one to one correlation is required for claiming Refund.

If required, this could be one reason for rejection by the authorities as it will be almost impossible to provide this in run rate items that do not have Serial nos. (ex Networking Cables and Components).
It is can be done easily. The Sale Invoices may contain all details that goods covered under this invoice are imported vide so and so B/E.

Documents required for claimingrefund need clarity. The Notification says:
"provide copies of the following documents". Does it mean that Original Documents are not required.
Only Original documents are required for processing claim and endorsing that refund is already availed on such documents. It is necessary to verify genuineness of documents and restricting repeated claim on the same documents.

"document evidencing payment of the said additional duty". Does this mean copy of TR6 challan or Bill of Entry copy.
The TR6 challan is required as proof of duty payment.

"documents evidencing payment of appropriate sales tax or value added tax". Does it mean we will have to produce copy of our Sales tax Returns and or Sales Tax payment challan. There will not be any specific one local sales Invoice to oneSales Tax payment challan as Taxes are paid based on monthly returns after taking credit of the VAT paid on Purchase.
The notification has not specified any documents. But any documentary evidence
which has proof that Sale Tax/VAT is paid to the concerned Government department
should be sufficient.


The transaction cost for claiming refund will be very high and the purpose.
Yes ,it is true.
A single Import will have 100's of local sales invoices each thru different states and at different points in time.
Consolidation of claims must be allowed.
Yes

If Original documents are required for verification before filling / payment of claims then this will be a challenge.
Yes

Refund of Additional duty of customs consequent to
Notification No. 102/2007-Customs dated 14th Sept,2007



The following points may be taken into consideration before
filing and claiming refund claim of the additional duty of customs.
1) Eligibility: when goods imported into India for subsequent sale .It covers only trading
goods who are liable to suffer sales tax in place of sale.
2) Time period for filing refund claim: Within six months from the date of duty payment as
.
per section 27(1)(i)(b) of the Customs Act 1962.The subsection 8 of the
section 3 of the Customs Tariff Act 1975 states that provision of the Customs
Act 1962 and rules and regulation made thereunder relating to refunds also
apply to the duty chargeable under the section 3.The additional duty of
customs is charged under sub section 5 of the section 3 of the Customs
Tariff Act 1975.Therefore provision of section 27 of the Customs Act are
also applicable for refund of additional duty of customs. The refund claim is to
be filed in the prescribed format under Customs Refund Application(Form)
Regulation ,1995.However, Unjust enrichment provisions are not attracted.
The notification itself says that it is the importer who is eligible for refund
claim provided he fulfill certain conditions as stated in the para 2 of the
Notification No 102.2007.Further the refund claim arose consequent to
payment of sales tax on imported goods and not in pursuance of
assessment order. There is no need to challenge assessment order before
appellate authority for such refund claim as held by Honorable SC in case
of Priya Blue and Flock India.
Argument for no time limit to file refund claim
a)But the Notification No 102/2007 does not specify any time limit for filing
refund claim. if any time limit is imposed for filing refund claim which is
consequent to the payment of sale tax on the imported goods at the time of
selling goods in domestic market, then, no refund of additional duty can be
availed for the goods sold after six months from duty payment. This is not
the legislator intention.
b)The additional duty of Customs is not a duty defined in the Customs Act.
The refund of duty is not to consequent to an order of assessment. No UJE
provisions are attracted. Then,only provision of time limit under section 27
is attracted,it is not legally correct.
As soon as goods are sold in the domestic market on payment of sale tax
and sale Invoice contains evidence of not availing Cenvat and payment of
sale tax,then,the importer is eligible for refund of additional duty of customs.
Hence, no time limit to file refund claim of the additional duty of customs.
3)Conditions to be satisfied for eligibility of refund claim as para 2 of the Notification
No 102/2007:
(a) The importer have to pay all duties;
(b) Not to avail CENVAT credit of the additional duty of customs .The
sale invoices should indicate specifically indicate in the invoice
that in respect of the goods covered therein, no credit of the
additional duty of customs levied under sub-section (5) of section 3
of the Customs Tariff Act, 1975 shall be admissible;
(c) The Refund claim to be filed at the place of assessment and duty
was paid on the imported goods.
(d) the importer shall, inter alia, provide copies of the following
documents along with the refund claim:
(i) TR-6 Challan as documentary evidence for payment of the
said additional duty;
(ii) Sale Invoices of the imported goods in respect of which
refund of the said additional duty is claimed;
(iii) documents evidencing payment of appropriate sales tax or
value added tax, as the case may be, by the importer, on sale of
such imported goods.
4) No test of Unjust Enrichment(UJE).
If the sale Invoices of the goods carries proof of Sale
Tax or VAT payment and non-admissibility of the Cenvat credit on account of said additional duty of
customs then the importer is eligible for refund of duty.
It is concluded that the refund claim may filed on the strength of Sale Invoices. There is no UJE bar.
No time limit restriction if refund claim is filed within six month of duty payment. However,any claim
after six months of duty payment may attract provisions of time bar,which may be contested by the
customs department.
The department may also issue further clarification in this regards.

Ravindra Kumar