Normally,any amount including Deposit and duty which is due from the Govt.Shown as receivable from the Govt.It is part of Asset in accounts.The test of UJE is that refunding amount should not charged to customer,and ,at the same time,it is claimed to Govt.
In another words, the amount due to customs and excise should not be brought to the company's
Profit and Lost account.
Friday, September 12, 2008
Monday, August 18, 2008
Refund of Extra Duty Deposit(EDD)
It is stated that the provision of section 27 of the Customs Act 1962, including unjust enrichment are not attracted to refund deposit made pending investigation by the SVB.
The following points are submitted to this effect:
The EDD is not duty of Customs as per section 2(15) of the Customs Act,1962.
The EDD is not charged as per section 12 of the Customs Act,1962 and the Customs Tariff Act,1975.
The EDD is not paid as per Customs(Provisional Duty Assessment)Regulation,1963.
The EDD is a deposit. It is charged as per para 9 of the Board`s Circular No. 11/2001-Cus., dated 23-2-2001. The said para is reproduced for reference :
''9. The amount of extra duty deposit presently kept at 1% will be continued. Board has however decided that if the importer does not furnish complete reply to the questionnaire within 30 days, of receipt of the ‘Questionnaire’ by the importer, the extra duty deposit will be increased to 5% till the date of receipt of reply by the Department. It should therefore be impressed upon the concerned importers (in the public notice that is issued) to ensure timely replies being sent to the Questionnaire to avoid any higher deposit being insisted''.
It is clear from the above para that EDD is charged initially 1% of the value of the goods,if importer does not submit `Questionnaire` within 30 days,then,the EDD may be increased to 5% .Therefore, the EDD is not charged as per Customs Tariff Act and section 12 of the Customs Act ,1962.
The relevant date for determining the rate of duty on the imported goods are governed by the section 15 of the Customs Act,1962.It may be date of presentation of the B/E under section 46 or section 68,or,on the date of payment of duty,as the case may be. Where as ,in case of EDD,if the importer fails to submit in stipulated time then it may be increased from 1% to 5% by the AC/DC(SVB). But no adjudication authority can increase rate of duty on any
goods for non submission of any documents(i.e Questionnaire) in stipulated time. Thus, the increase in rate of EDD is not governed by section 15 of the Customs Act,1962,as EDD is not a duty.
The payment of Extra Duty Deposit (EDD) is shown separately in the challan.
The EDD is charged as 1% or 5 % of the value of the goods as per SVB circular,irrespective of classification and rate of duty applicable on the goods . Where as ,duty is determined based on classification and rate of duty applicable ,in addition to value of the imported goods. Therefore ,the EDD and duty are not the same.
The honourable Tribunal in following cases have held that the EDD is not a duty and provision of section 27 of the Customs Act,1962 are not attracted for refunding of the same.
i) 2007 (208) E.L.T. 439 (Tri. - Chennai) COMMISSIONER CUSTOMS,
CHENNAI Versus SAYONARA EXPORTS PVT. LTD
ii) 2007 (213) E.L.T. 281 (Tri. - Bang.) COMMISSIONER OF
CUSTOMS, BANGALORE Versus ECOMASTER (INDIA) PVT. LTD
The EDD is similar to payment made for fine,penalty and bank guarantee on imported goods. The provision of section 27 are not attracted for refunding these payment.
Provision of subsection 2(a) and 5(a) of section 18 of the Customs Act,1962 are not attracted for refund of EDD
The provision are attracted for duty and not for deposit. The assessment of duty includes valuation,classification and determination of rate of duty of the imported goods. In the present case, there is no change in valuation, classification and rate of duty at the time of SVB finalisation by the Groups. Therefore, there is no change in provisionally duty assessed and duty finally assessed on the imported goods. No adjustment of duty as per sub section 2(a) of the section 18 of the Customs Act. Hence, no refund of duty. Provision of subsection 5(a) of section 18 of the Customs Act are also not attracted,if there is no refund of duty.
Therefore,keeping in view of above cited facts and law,the EDD may be refunded without seeking documents for Unjust enrichment.
It is stated that the provision of section 27 of the Customs Act 1962, including unjust enrichment are not attracted to refund deposit made pending investigation by the SVB.
The following points are submitted to this effect:
The EDD is not duty of Customs as per section 2(15) of the Customs Act,1962.
The EDD is not charged as per section 12 of the Customs Act,1962 and the Customs Tariff Act,1975.
The EDD is not paid as per Customs(Provisional Duty Assessment)Regulation,1963.
The EDD is a deposit. It is charged as per para 9 of the Board`s Circular No. 11/2001-Cus., dated 23-2-2001. The said para is reproduced for reference :
''9. The amount of extra duty deposit presently kept at 1% will be continued. Board has however decided that if the importer does not furnish complete reply to the questionnaire within 30 days, of receipt of the ‘Questionnaire’ by the importer, the extra duty deposit will be increased to 5% till the date of receipt of reply by the Department. It should therefore be impressed upon the concerned importers (in the public notice that is issued) to ensure timely replies being sent to the Questionnaire to avoid any higher deposit being insisted''.
It is clear from the above para that EDD is charged initially 1% of the value of the goods,if importer does not submit `Questionnaire` within 30 days,then,the EDD may be increased to 5% .Therefore, the EDD is not charged as per Customs Tariff Act and section 12 of the Customs Act ,1962.
The relevant date for determining the rate of duty on the imported goods are governed by the section 15 of the Customs Act,1962.It may be date of presentation of the B/E under section 46 or section 68,or,on the date of payment of duty,as the case may be. Where as ,in case of EDD,if the importer fails to submit in stipulated time then it may be increased from 1% to 5% by the AC/DC(SVB). But no adjudication authority can increase rate of duty on any
goods for non submission of any documents(i.e Questionnaire) in stipulated time. Thus, the increase in rate of EDD is not governed by section 15 of the Customs Act,1962,as EDD is not a duty.
The payment of Extra Duty Deposit (EDD) is shown separately in the challan.
The EDD is charged as 1% or 5 % of the value of the goods as per SVB circular,irrespective of classification and rate of duty applicable on the goods . Where as ,duty is determined based on classification and rate of duty applicable ,in addition to value of the imported goods. Therefore ,the EDD and duty are not the same.
The honourable Tribunal in following cases have held that the EDD is not a duty and provision of section 27 of the Customs Act,1962 are not attracted for refunding of the same.
i) 2007 (208) E.L.T. 439 (Tri. - Chennai) COMMISSIONER CUSTOMS,
CHENNAI Versus SAYONARA EXPORTS PVT. LTD
ii) 2007 (213) E.L.T. 281 (Tri. - Bang.) COMMISSIONER OF
CUSTOMS, BANGALORE Versus ECOMASTER (INDIA) PVT. LTD
The EDD is similar to payment made for fine,penalty and bank guarantee on imported goods. The provision of section 27 are not attracted for refunding these payment.
Provision of subsection 2(a) and 5(a) of section 18 of the Customs Act,1962 are not attracted for refund of EDD
The provision are attracted for duty and not for deposit. The assessment of duty includes valuation,classification and determination of rate of duty of the imported goods. In the present case, there is no change in valuation, classification and rate of duty at the time of SVB finalisation by the Groups. Therefore, there is no change in provisionally duty assessed and duty finally assessed on the imported goods. No adjustment of duty as per sub section 2(a) of the section 18 of the Customs Act. Hence, no refund of duty. Provision of subsection 5(a) of section 18 of the Customs Act are also not attracted,if there is no refund of duty.
Therefore,keeping in view of above cited facts and law,the EDD may be refunded without seeking documents for Unjust enrichment.
Wednesday, June 11, 2008
Refund of EDD
Exra Duty Deposit(EDD) is not a custom duty.It is only deposit and amount is calculated on duty amount.
Duty is defined under section 2 and 12 of the Customs Act,1962.
They should fall under First and second schedule of the Tariff Act ,1975. But EDD is not defined in the Customs Tariff and it is not duty.
The provision of section 27 are attracted only for duty and not for EDD.Therefore, no test of UJE and no time limit for filing any refund of EDD.
Monday, April 28, 2008
Today,the Board has issued circular for procedures to be adopted for refund of additional duty.It has clarified issue of UJE and time limit for filing refund claim,etc.
Refund of Customs 4% SAD
Circular No.6 /2008-Customs
F. No. 401/104/2007-Cus.III
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
North Block, New Delhi.
28th April, 2008.
Subject: Procedure to be adopted for refund of 4% Additional Duty of Customs in pursuance of Notification No.102/2007-Customs dated 14.9.2007 – regarding.
I am directed to state that various representations from importers, exporters, trade and industry associations and references from some of the Customs field formations have been received in the Board seeking clarification regarding refund of 4% Additional Duty of Customs leviable under sub-section (5) of Section 3 of the Customs Tariff Act, 1975 in pursuance of Notification No.102/2007-Customs dated 14.9.2007.
2. The Board has examined this matter in consultation with the Customs field formations. The following procedure may be adopted by the field formations in order to settle expeditiously the refund claims arising out of the exemption provided vide Notification No.102/2007-Customs dated 14.9.2007.
3. Manner of refund and its receipt:
Your attention is invited to the instructions communicated vide F.No.354/129/2007-TRU dated 14.9.2007 at the time of issue of the Notification No.102/2007-Customs dated 14.9.2007. It is reiterated that the scheme of refund of 4% Additional Duty of Customs has been notified through an exemption notification, and hence, the conditions as prescribed only in the said notification will apply. All refund applications under the aforesaid notification shall be received by the concerned field formations in their Centralized Refund Section, and the applicants would be given proper acknowledgement. The status of these refund claims shall also be displayed in the online database of customs duty refunds maintained by the respective Commissionerates.
4. Time – Limit:
4.1. In the Notification No.102/2007-Customs dated 14.9.2007, no specific time limit has been prescribed for filing a refund application. Under the circumstances, a doubt has been expressed that whether the normal time-limit of six months prescribed in section 27 of the Customs Act, would apply. In the absence of specific provision of section 27 being made applicable in the said notification, the time limit prescribed in this section would not be automatically applicable to refunds under the notification. Further, it was also represented that the goods imported may have to be despatched for sale to different parts of the country and that the importer may find it difficult to dispose of the imported goods and complete the requisite documentation within the normal period of six months. Taking into account various factors, it has been decided to permit importers to file claims under the above exemption upto a period of one year from the date of payment of duty. Necessary change in the notification is being made so as to incorporate a specific provision prescribing maximum time limit of one year from the date of payment of duty, within which the refund could be filed by any person. It is also clarified that the importers would be entitled to refund of duties only in respect of quantities for which the prescribed documents are made available and the claims submitted within the maximum prescribed time of one year. Unsold stocks would not be eligible for refunds.
4.2. It is also clarified that only a single claim against a particular Bill of Entry should be permitted to be filed within the maximum time period of one year. Filing of refund claim for a part quantity in a bill of entry shall not be allowed except when this is necessary at the end of the one year period. Further, since the Sales Tax (ST) / Value Added Tax (VAT) is being paid on periodical or monthly basis, even in case of bills of entry where the entire quantity of goods are sold within a month, all such cases shall be consolidated in a single refund claim and filed with the Customs authorities on a monthly basis. In other words, there would be a single refund claim in respect of one importer in a month irrespective of the number of Bills of Entry (B/Es) processed by the respective Commissionerate.
4.3. With the extension of time limit and the requirement to file claims on a monthly basis, Board feels that the number of refund claims should be manageable for disposal within the normal period of three months. Further, in the absence of specific provision for payment of interest being made applicable under the said notification, the payment of interest does not arise for these claims. However, Board directs that the field formations shall ensure disposal of all such refund claims under the said notification within the normal period not exceeding three months from the date of receipt.
5. Documents to be enclosed with refund claim:
5.1. Notification No.102/2007-Customs dated 14.9.2007 prescribes the documents that shall be enclosed along with the refund claim. In order to ensure sanction of refund properly, it is clarified that the document evidencing payment of ST/VAT (in original) duly issued by or acknowledged by the concerned ST/VAT authorities shall be submitted by the importer. A certificate from a Chartered Accountant or any other independent authority certifying payment of ST/VAT would not be acceptable in lieu of the original documents. However, a certificate from the statutory auditor / Chartered Accountant, who certifies the importer’s annual financial accounts under the Companies Act or any statute, correlating the payment of ST/VAT on the imported goods (in respect of which refund is claimed) with the invoices of sale, would be required along with the original tax / duty payment documents as proof of payment of appropriate ST/VAT for the purpose of para 2(d) & (e) of the said notification.
5.2. For the purpose of refund under this notification, it is reiterated that appropriate Sales Tax or VAT means Sales Tax or VAT in case of Intra-State sales and Central Sales Tax (CST) in case of Inter-State sales.
5.3. The exemption contained in the said notification envisages that the importer shall file a refund claim for 4% CVD (“said additional duty of Customs”) paid on imported goods and shall pay on sale of the said goods “appropriate Sales Tax or VAT as the case may be”. Hence, it is clear that there is no stipulation in the notification that the exemption is available only if the rate of ST/VAT is equal to or higher than the rate of additional duty of Customs; nor is there a condition that if the rate of ST/VAT happens to be lower than 4%, the refund would be restricted to the lower amount. As such, it is clarified that it will not be appropriate to reduce the refund amount in such a situation and the entire 4% CVD, if otherwise found eligible, shall be refunded.
6. Unjust enrichment:
6.1. The 4% CVD exemption under the said notification is operated through a refund mechanism, wherein the importer would have to first pay the said 4% CVD at the time of importation and, thereafter, can claim refund of 4% CVD on production of documents showing that the appropriate ST/VAT has been paid. Hence, the purpose of granting this exemption is to ensure that the importer pays either 4% CVD or the appropriate ST/VAT and not both. It is not the intention of the Government to allow the importer to recover the 4% CVD from the buyer as well as to claim refund of this amount from Customs. Hence, the principle of unjust enrichment needs to be examined in each case before sanction of refund under this notification. However, considering the voluminous transactions and the documents involved in the cycle, from import to sale, it was felt that it would be expedient to allow the importer to submit a certificate from the statutory auditor / Chartered Accountant who certifies the annual accounts of the importer, that the burden of 4% CVD has not been passed on by the importer to the buyer and to fulfill the requirement of unjust enrichment.
6.2. In view of the above, it is clarified that the doctrine of unjust enrichment will apply to 4% CVD refunds Scheme under the said exemption notification issued in terms of Section 25(1) of the Customs Act, 1962. However, importers may produce a certificate from the statutory auditor/Chartered Accountant who certifies the importer’s annual financial accounts under the Companies Act or any statute, explaining how the burden of 4% CVD has not been passed on by the importer and to fulfill the requirement of unjust enrichment. In addition to the aforesaid the importer shall also make a self-declaration along with the refund claim to the effect that he has not passed on the incidence of 4% CVD to any other person.
7. Other miscellaneous issues:
7.1. As regards the other doubt expressed by certain field formations on the effective date of the operation of refund scheme, it is stated that the said notification No.102/2007-Customs was issued on 14.9.2007. Accordingly, it is clarified that only those cases where 4% CVD was paid on or subsequent to 14.9.2007, will qualify for refunds under this scheme subject to fulfillment of prescribed conditions.
7.2. In respect of the doubt that whether the stamping or hand-writing of declaration in the invoice would be acceptable for the purpose of fulfilling the condition as mentioned in para 2(b) of the said notification, it is clarified that a stamp on the invoice (to state that no CENVAT Credit is admissible) should suffice for the purpose of para 2 (b) of the said notification.
7.3. On the issue that in case of 4% CVD having been paid through DEPB Scrip, whether refund could be paid by cash, it is clarified that instead of refunding the duty in cash, the amount eligible for refund should be re-credited on the relevant DEPB Scrip.
8. In view of the above clarifications, you are requested to kindly take further necessary action in the matter. The above instructions are being issued so that necessary administrative arrangements are made to deal with 4% CVD refund claims and the refund claims are sanctioned properly. Accordingly, all the concerned Commissioners of Customs / Central Excise may kindly ensure for proper implementation of these instructions of the Board.
9. A suitable Public Notice and Standing Order may be issued for the guidance of the trade and staff. Difficulties faced, if any, in implementation of the Circular may be brought to the notice of the Board at an early date.
10. Hindi version will follow.
Yours faithfully,
(Aseem Kumar)
Under Secretary (Customs)
Tel. 2309 4182
Fax: 2309 2173
Internal circulation – As usual.
Refund of Customs 4% SAD
Circular No.6 /2008-Customs
F. No. 401/104/2007-Cus.III
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
North Block, New Delhi.
28th April, 2008.
Subject: Procedure to be adopted for refund of 4% Additional Duty of Customs in pursuance of Notification No.102/2007-Customs dated 14.9.2007 – regarding.
I am directed to state that various representations from importers, exporters, trade and industry associations and references from some of the Customs field formations have been received in the Board seeking clarification regarding refund of 4% Additional Duty of Customs leviable under sub-section (5) of Section 3 of the Customs Tariff Act, 1975 in pursuance of Notification No.102/2007-Customs dated 14.9.2007.
2. The Board has examined this matter in consultation with the Customs field formations. The following procedure may be adopted by the field formations in order to settle expeditiously the refund claims arising out of the exemption provided vide Notification No.102/2007-Customs dated 14.9.2007.
3. Manner of refund and its receipt:
Your attention is invited to the instructions communicated vide F.No.354/129/2007-TRU dated 14.9.2007 at the time of issue of the Notification No.102/2007-Customs dated 14.9.2007. It is reiterated that the scheme of refund of 4% Additional Duty of Customs has been notified through an exemption notification, and hence, the conditions as prescribed only in the said notification will apply. All refund applications under the aforesaid notification shall be received by the concerned field formations in their Centralized Refund Section, and the applicants would be given proper acknowledgement. The status of these refund claims shall also be displayed in the online database of customs duty refunds maintained by the respective Commissionerates.
4. Time – Limit:
4.1. In the Notification No.102/2007-Customs dated 14.9.2007, no specific time limit has been prescribed for filing a refund application. Under the circumstances, a doubt has been expressed that whether the normal time-limit of six months prescribed in section 27 of the Customs Act, would apply. In the absence of specific provision of section 27 being made applicable in the said notification, the time limit prescribed in this section would not be automatically applicable to refunds under the notification. Further, it was also represented that the goods imported may have to be despatched for sale to different parts of the country and that the importer may find it difficult to dispose of the imported goods and complete the requisite documentation within the normal period of six months. Taking into account various factors, it has been decided to permit importers to file claims under the above exemption upto a period of one year from the date of payment of duty. Necessary change in the notification is being made so as to incorporate a specific provision prescribing maximum time limit of one year from the date of payment of duty, within which the refund could be filed by any person. It is also clarified that the importers would be entitled to refund of duties only in respect of quantities for which the prescribed documents are made available and the claims submitted within the maximum prescribed time of one year. Unsold stocks would not be eligible for refunds.
4.2. It is also clarified that only a single claim against a particular Bill of Entry should be permitted to be filed within the maximum time period of one year. Filing of refund claim for a part quantity in a bill of entry shall not be allowed except when this is necessary at the end of the one year period. Further, since the Sales Tax (ST) / Value Added Tax (VAT) is being paid on periodical or monthly basis, even in case of bills of entry where the entire quantity of goods are sold within a month, all such cases shall be consolidated in a single refund claim and filed with the Customs authorities on a monthly basis. In other words, there would be a single refund claim in respect of one importer in a month irrespective of the number of Bills of Entry (B/Es) processed by the respective Commissionerate.
4.3. With the extension of time limit and the requirement to file claims on a monthly basis, Board feels that the number of refund claims should be manageable for disposal within the normal period of three months. Further, in the absence of specific provision for payment of interest being made applicable under the said notification, the payment of interest does not arise for these claims. However, Board directs that the field formations shall ensure disposal of all such refund claims under the said notification within the normal period not exceeding three months from the date of receipt.
5. Documents to be enclosed with refund claim:
5.1. Notification No.102/2007-Customs dated 14.9.2007 prescribes the documents that shall be enclosed along with the refund claim. In order to ensure sanction of refund properly, it is clarified that the document evidencing payment of ST/VAT (in original) duly issued by or acknowledged by the concerned ST/VAT authorities shall be submitted by the importer. A certificate from a Chartered Accountant or any other independent authority certifying payment of ST/VAT would not be acceptable in lieu of the original documents. However, a certificate from the statutory auditor / Chartered Accountant, who certifies the importer’s annual financial accounts under the Companies Act or any statute, correlating the payment of ST/VAT on the imported goods (in respect of which refund is claimed) with the invoices of sale, would be required along with the original tax / duty payment documents as proof of payment of appropriate ST/VAT for the purpose of para 2(d) & (e) of the said notification.
5.2. For the purpose of refund under this notification, it is reiterated that appropriate Sales Tax or VAT means Sales Tax or VAT in case of Intra-State sales and Central Sales Tax (CST) in case of Inter-State sales.
5.3. The exemption contained in the said notification envisages that the importer shall file a refund claim for 4% CVD (“said additional duty of Customs”) paid on imported goods and shall pay on sale of the said goods “appropriate Sales Tax or VAT as the case may be”. Hence, it is clear that there is no stipulation in the notification that the exemption is available only if the rate of ST/VAT is equal to or higher than the rate of additional duty of Customs; nor is there a condition that if the rate of ST/VAT happens to be lower than 4%, the refund would be restricted to the lower amount. As such, it is clarified that it will not be appropriate to reduce the refund amount in such a situation and the entire 4% CVD, if otherwise found eligible, shall be refunded.
6. Unjust enrichment:
6.1. The 4% CVD exemption under the said notification is operated through a refund mechanism, wherein the importer would have to first pay the said 4% CVD at the time of importation and, thereafter, can claim refund of 4% CVD on production of documents showing that the appropriate ST/VAT has been paid. Hence, the purpose of granting this exemption is to ensure that the importer pays either 4% CVD or the appropriate ST/VAT and not both. It is not the intention of the Government to allow the importer to recover the 4% CVD from the buyer as well as to claim refund of this amount from Customs. Hence, the principle of unjust enrichment needs to be examined in each case before sanction of refund under this notification. However, considering the voluminous transactions and the documents involved in the cycle, from import to sale, it was felt that it would be expedient to allow the importer to submit a certificate from the statutory auditor / Chartered Accountant who certifies the annual accounts of the importer, that the burden of 4% CVD has not been passed on by the importer to the buyer and to fulfill the requirement of unjust enrichment.
6.2. In view of the above, it is clarified that the doctrine of unjust enrichment will apply to 4% CVD refunds Scheme under the said exemption notification issued in terms of Section 25(1) of the Customs Act, 1962. However, importers may produce a certificate from the statutory auditor/Chartered Accountant who certifies the importer’s annual financial accounts under the Companies Act or any statute, explaining how the burden of 4% CVD has not been passed on by the importer and to fulfill the requirement of unjust enrichment. In addition to the aforesaid the importer shall also make a self-declaration along with the refund claim to the effect that he has not passed on the incidence of 4% CVD to any other person.
7. Other miscellaneous issues:
7.1. As regards the other doubt expressed by certain field formations on the effective date of the operation of refund scheme, it is stated that the said notification No.102/2007-Customs was issued on 14.9.2007. Accordingly, it is clarified that only those cases where 4% CVD was paid on or subsequent to 14.9.2007, will qualify for refunds under this scheme subject to fulfillment of prescribed conditions.
7.2. In respect of the doubt that whether the stamping or hand-writing of declaration in the invoice would be acceptable for the purpose of fulfilling the condition as mentioned in para 2(b) of the said notification, it is clarified that a stamp on the invoice (to state that no CENVAT Credit is admissible) should suffice for the purpose of para 2 (b) of the said notification.
7.3. On the issue that in case of 4% CVD having been paid through DEPB Scrip, whether refund could be paid by cash, it is clarified that instead of refunding the duty in cash, the amount eligible for refund should be re-credited on the relevant DEPB Scrip.
8. In view of the above clarifications, you are requested to kindly take further necessary action in the matter. The above instructions are being issued so that necessary administrative arrangements are made to deal with 4% CVD refund claims and the refund claims are sanctioned properly. Accordingly, all the concerned Commissioners of Customs / Central Excise may kindly ensure for proper implementation of these instructions of the Board.
9. A suitable Public Notice and Standing Order may be issued for the guidance of the trade and staff. Difficulties faced, if any, in implementation of the Circular may be brought to the notice of the Board at an early date.
10. Hindi version will follow.
Yours faithfully,
(Aseem Kumar)
Under Secretary (Customs)
Tel. 2309 4182
Fax: 2309 2173
Internal circulation – As usual.
Friday, February 29, 2008
No pre-audit for refund of duty below Rs 5,00,000/-. This as per Board`s Circular as reproduced before
Circular No.24/2007-Cus
F. No. 401/229/2006-Cus.III
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
North Block, New Delhi.
02 July , 2007.
To
All Chief Commissioners of Customs.
All Chief Commissioners of Central Excise.
Principal Chief Controller of Accounts, CBEC.
Chief Departmental Representative, CESTAT.
All Commissioners of Central Excise.
All Commissioners of Customs.
Webmaster@icegate.gov.in.
Sir,
Subject: Delay in payment of customs duty refunds – reg.
***
I am directed to state that various representations from importers, exporters, trade and industry associations have been received in the Board regarding delay in payment of Customs duty refunds and the hardships faced in obtaining refunds from Customs field formations. Further, in a number of cases it has also come to the notice that the Courts and higher judicial authorities have taken adverse note of the delay caused in refund of duty.
2. Refund of customs duty involves acknowledgement and processing of refund application for sanction or rejection of refund in terms of section 27 of the Customs Act, 1962 and the Customs Refund Application (Form) Regulations, 1985. Further, Board have also issued instructions from time to time clarifying the doubts raised by field formations in dealing with the refund claims. (Board’s circular No. 59/95-Cus dated 5.6.1995). Needless to say that if these procedures are followed properly, normally refund applications should be disposed off within the interest free time limit of three months.
3. However, it is noticed that the aspect of timely refund of Customs duty has not been given due importance by the field formations. Therefore, Board desires that in order to ensure expeditious disposal of Customs duty refund applications and to enhance transparency in refund disbursement as well as bring alertness among the officers, the following procedure should be followed:
4.1. System for receipt and acknowledgement of all Customs duty refund applications: All refund applications made by any person under section 27 of the Customs Act, whether by post or courier or personal delivery, shall be received by the department and a simple receipt, for having received the application that is said to have been filed as ‘refund application’ shall be issued immediately. At this stage the receipt should make it clear that the application has not been scrutinized for its completeness. These applications are required to be scrutinized for their completeness within ten working days of their receipt, for giving acknowledgement by the proper officer as per the Customs Refund Application (Form) Regulations, 1995. Hence, if any deficiency is found in the application or any document is required by the department, the same shall be informed at this stage of initial scrutiny itself within ten working days of the initial receipt. This will avoid any chance for raising repeated queries to the applicant, in a piece-meal manner and bring certainty in dealing with refund applications.
4.2. Processing of refund applications and their disposal: Application of refund found to be complete in all respects by Customs, after scrutiny as above, shall be processed on ‘first-come-first served’ basis so as to decide whether the whole or any part of the duty and interest paid by the applicant is refundable. If refund is due in such case, an order for refund is required to be passed in terms of sub-section (2) to section 27 or where the claim for refund is found liable to be rejected, as the case may be, a speaking order shall be passed giving complete reasons for the order. Further, in respect of the provisions of unjust enrichment, the order should indicate that this aspect has been examined based on the guidelines, if any, applicable; the order should also contain the findings of adjudicating authority on the documents produced in support of the claim and the basis for determining the amount as either refundable to the claimant or payable to the Consumer Welfare Fund or the claim not being admissible.
4.3. Issue of Cheque: Where the refund application has been admitted, whether in part or in full, and claimant is eligible for refund, the Deputy / Assistant Commissioner of Customs may ensure that payment is made to the party within 3 days of the order passed after due audit, if any. In all such cases refund of amount shall be paid to the applicant by a cheque on the authorised bank with which the sanctioning authority maintains account. After the cheque has been signed, it shall either be delivered to the claimant or his authorised representative personally when he next calls for it or sent to him by Registered Post ‘Acknowledgement Due’ at Government cost, on the basis of pre-receipt already obtained from the claimant.
4.4. Audit system: Existing instructions on audit scrutiny of refunds shall continue. Accordingly, all applications involving a refund of duty and/or interest of Rs. 5 lakhs or more shall be subjected to pre-audit as per the existing practice. The applications of refund of amount below Rs.50,000/- may be post-audited on the basis of the random selection by Deputy/Assistant Commissioner (Audit). The selection can be made in such a way that 25 per cent of the refund applications are post-audited. The applications of refund for amount between Rs.50,000/- and Rs. 5 lakhs should be compulsorily post audited. This audit system has been prescribed with a view to check improper sanction and payment of refunds. However, this does not dispense with the verification of the refund vouchers and the re-conciliation of refunds, which shall continue to be done by the Chief Account Officers. However, it may be ensured that where pre-audit is involved the action is completed at the earliest so that the disposal of refund applications is not unduly delayed.
5. CVC’s instructions: Your attention is also invited to the instructions issued by the Central Vigilance Commission (CVC) under section 8(1)(h) of the CVC Act, 2003 to bring about greater transparency and accountability in the discharge of regulatory, enforcement and other public dealings of the Government organisations vide their Circular No.40/11/06 dated 22.11.2006. (Refer CVC website http://www.cvc.nic.in/ under ‘Improving Vigilance administration by leveraging technology). These instructions, interalia, require that status of individual applications / matters should be made available on the organisation’s website and should be updated from time to time so that the applicants remain duly informed about the status of their applications. It is further stated that the manual records maintained presently for various purposes may continue.
6.1. System of maintaining online database on Customs duty refunds: In pursuance of the instructions of CVC, all Commissioners of Customs shall establish a mechanism for maintenance of a comprehensive database in their respective website, indicating the receipt, acknowledgement, action taken for disposal (either payment or rejection) of refund applications and those pending at the end of the month. This shall be implemented with in a period of three months time and a report of the same may be sent to the Board and DG (Inspection).
The details of refund application such as name of the claimant, file number, date of application, amount of refund claimed, date of its acknowledgement shall be indicated in chronological order by the date of its receipt. The applications may be serially numbered for each year and shall be shown in a single list indicating their respective status distinctly. The illustrative status that could be mentioned for easy understanding of any applicant may include the following: (i) refund application received but pending for scrutiny and acknowledgement (ii)(a) refund application acknowledged for its completeness (ii)(b) refund application found incomplete and returned for rectification of deficiency (iii)(a) refund application rejected by passing a speaking order (iii)(b) refund application sanctioned, pending verification by audit (iv) cheques issued for refunds sanctioned and paid to applicant/ credited to consumer welfare fund. This is not exhaustive and if any other stage of processing of refund application is involved the same may be indicated. An abstract at the end of the month about the total number of refund applications received, acknowledged, disposed and pending may also be indicated.
This online data base would enable any person who had applied for refund with Customs, to check the status of his refund application by reference to the date of his refund application having been received by Customs. This data will be accessible to the trade and public as well as by all Customs officers to enhance transparency. Further, the status of individual applications for refund of customs duty shall be updated from time to time, at least daily, so that the applicants remain duly informed about the status of their applications. The data may be allowed for display in the website for three months period from the date of its final disposal and there after it can be moved to the history data base.
7.1. Monitoring Mechanism: Chief Commissioners/ Directorate General of Inspection (DGI) is requested to review the position of refunds in their respective zones/select zones, to check on the timely sanction of refund applications. If any refund application is pending for long period, the reasons for the same may be identified by the concerned Chief Commissioner and action initiated for their disposal by reference to the concerned Commissionerate. DGI may also access the data base of such refund applications and maintain the data in respect of those refund applications pending for long period and action taken thereon, for reporting to the Board.
8. The above instructions are being issued so that an administrative arrangement is made on a permanent basis to deal with refund of customs duty, an important aspect of tax administration which needs to be given due importance in view of the prompt disposal as per legal provisions and their revenue implications. Accordingly, the Commissioners of Customs and Chief Commissioners of Customs concerned may ensure for proper implementation of these instructions of the Board.
9. A suitable Public Notice and Standing Order may be issued for the guidance of the trade and staff. Difficulties faced, if any, in implementation of the Circular may be brought to the notice of the Board at an early date.
Yours faithfully,
(Aseem Kumar)Under Secretary (Customs)
Copy to:
1. PS to Chairman (E&C),
2. All Members, CBEC
3. Principal CCA, CBEC – with the request to instruct PAOs to ensure timely issuance of Cheque (for the refund amount) after the refund order is passed by the Proper Officer (Para 4.3 refers).
4. Additional Director General, Directorate of Data Management - Board desires that on the basis of the monthly abstracts or data available on website of the Commissionerates a comprehensive report shall be prepared and their review shall be put up to Member (Customs) by the ADG, Data Management for periodical monitoring.
5.Director General, Directorate General of Inspection – Based on the request by ADG, Directorate of Data Management, necessary inspection may be conducted of the refund section in select Customs Houses where the pendencies are high and the disposal action has not resulted in the desired action for specific action.
6. All Directorates, CBEC
7. All Joint Secretaries/ Commissioners, CBEC
8. All Directors/Deputy Secretaries, CBEC
9. All Under Secretaries/STOs/TOs, CBEC
10. Guard file.
(Aseem Kumar)Under Secretary (Customs)
Tuesday, January 08, 2008
There is change in pre-audit process of refund claim in the Excise department. Now the audit will be carried out by the AC/DC and not by the commissioner.
The Board`s circular is :
Circular No.857/15/2007/CX
F.No.268/24/2006-CX-8
Government of India
Ministry of FinanceDepartment of RevenueCentral Board of Excise & Customs***
New Delhi dated the November 2, 2007
To
The Chief Commissioners of Central Excise (All)
The Commissioners of Central Excise (All)
The Director Generals of Custom and Central Excise (All)
Sub.: Procedure relating to sanction and pre-audit of refund/ rebate claims- regarding.
I am directed to invite your attention to Board’s circular No. 809/6/2005-CX dated 01.03.2005, wherein the procedure relating to sanction and pre-audit of refund/rebate claims has been prescribed. It has been brought to the notice of the Board that various court judgments have held that the procedure of pre-audit before sanction of refund amounts to interference with the quasi-judicial function of the refund sanctioning authority. References have also been received from the field formations in this regard.2. The matter has been examined. Pre-audit of refund and rebate claims serves the twin purpose of ensuring uniformity in procedure and enables effective monitoring of sanction of refund/rebate claims. Therefore, this procedure cannot be dispensed with. However, in view of the observations of the Hon’ble Courts, it has been decided that pre-audit of all refund/rebate claims will be conducted by the Assistant/Deputy Commissioner (Audit), in the Commissionerate Headquarters Office. Thereafter, the Divisional Assistant/Deputy Commissioner will pass an order-in-original in respect of the claim. Accordingly, the present system of pre-audit of claims by Commissioner would henceforth be dispensed with. However, the orders-in-original passed in this regard shall be subjected to review by the Commissioner. 3. The relevant portions of circular No. 809/06/2005-CX dated 01.03.2005 stand amended as discussed above.
4. The field formations may be suitably informed.
5. Hindi version will follow.
Yours faithfully,
(Rahul Nangare)
Under Secretary to the Government of India
The Board`s circular is :
Circular No.857/15/2007/CX
F.No.268/24/2006-CX-8
Government of India
Ministry of FinanceDepartment of RevenueCentral Board of Excise & Customs***
New Delhi dated the November 2, 2007
To
The Chief Commissioners of Central Excise (All)
The Commissioners of Central Excise (All)
The Director Generals of Custom and Central Excise (All)
Sub.: Procedure relating to sanction and pre-audit of refund/ rebate claims- regarding.
I am directed to invite your attention to Board’s circular No. 809/6/2005-CX dated 01.03.2005, wherein the procedure relating to sanction and pre-audit of refund/rebate claims has been prescribed. It has been brought to the notice of the Board that various court judgments have held that the procedure of pre-audit before sanction of refund amounts to interference with the quasi-judicial function of the refund sanctioning authority. References have also been received from the field formations in this regard.2. The matter has been examined. Pre-audit of refund and rebate claims serves the twin purpose of ensuring uniformity in procedure and enables effective monitoring of sanction of refund/rebate claims. Therefore, this procedure cannot be dispensed with. However, in view of the observations of the Hon’ble Courts, it has been decided that pre-audit of all refund/rebate claims will be conducted by the Assistant/Deputy Commissioner (Audit), in the Commissionerate Headquarters Office. Thereafter, the Divisional Assistant/Deputy Commissioner will pass an order-in-original in respect of the claim. Accordingly, the present system of pre-audit of claims by Commissioner would henceforth be dispensed with. However, the orders-in-original passed in this regard shall be subjected to review by the Commissioner. 3. The relevant portions of circular No. 809/06/2005-CX dated 01.03.2005 stand amended as discussed above.
4. The field formations may be suitably informed.
5. Hindi version will follow.
Yours faithfully,
(Rahul Nangare)
Under Secretary to the Government of India
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