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
Monday, December 17, 2007
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
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
Wednesday, December 05, 2007
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
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
Thursday, November 22, 2007
Monday, November 19, 2007
Monday, November 12, 2007
Whether each time duty under protest has to be registered with The Custom Department or once it is registered then it is valid for subsequent import clearance?
There is no rules under Customs Act 1962 prescribed for exact procedure to be followed in case duty paid under protest to the Customs department.But various Court rulings and Public Notices are issued by the department which state the procedures to be followed by the Trade for duty under protest.
Logically,if any person is registering protest than it is assumed that in future also he is paying duty under protest.Suppose,if he pay duty without any protest for future clearance then it
means that earlier registered protest is deemed to have been vacated.The Importer has accepted contention of the department for paying duty.In another situation,once duty is paid under protest,the importer has to pay under protest till it is vacated by the department.
As per Atice Industries ltd Vs Collector,1991(54)E.L.T 285(Tribunal),and,Fire composite (P) ltd Vs Collector ,1995(78) E.L.T 73 (Tribunal) duty is paid under protest till the letter of protest is vacated
Under duty protest,only situation of refund may arise but not the short collection of duty.Therefore,it is the importer who is interested in getting stay vacated.
There is no rules under Customs Act 1962 prescribed for exact procedure to be followed in case duty paid under protest to the Customs department.But various Court rulings and Public Notices are issued by the department which state the procedures to be followed by the Trade for duty under protest.
Logically,if any person is registering protest than it is assumed that in future also he is paying duty under protest.Suppose,if he pay duty without any protest for future clearance then it
means that earlier registered protest is deemed to have been vacated.The Importer has accepted contention of the department for paying duty.In another situation,once duty is paid under protest,the importer has to pay under protest till it is vacated by the department.
As per Atice Industries ltd Vs Collector,1991(54)E.L.T 285(Tribunal),and,Fire composite (P) ltd Vs Collector ,1995(78) E.L.T 73 (Tribunal) duty is paid under protest till the letter of protest is vacated
Under duty protest,only situation of refund may arise but not the short collection of duty.Therefore,it is the importer who is interested in getting stay vacated.
Thursday, November 08, 2007
The public notice issued by the Chennai custom House for procedure to be followed for Duty under protest is reproduced below:
OFFICE OF THE COMMISSIONER OF CUSTOMS, CUSTOM HOUSE
33, RAJAJI SALAI, CHENNAI – 600 001.
PUBLIC NOTICE 7 /2002
Sub: Registering of protest for payment of duty by Importers – Reg.
********
Attention of the importers, Custom House Agents and members of the trading public is invited to this Office Public Notice No.128/76 and 159/85 regarding registration of protest wherever Customs Duty is paid under protest. In continuation of these public Notices, this P.N. is issued.
2. Instances have come to notice that the importers are registering their protest in a simple letter form without adhering the procedure setout in the said Public Notices. Such simple protests in payment of duty without observing the conditions laid down in the above Public Notices and the following procedures cannot be construed as protest and noclaim whatsoever can be made based on such simple protests. Therefore, the Importers / Custom House Agents are instructed to adhere to the following procedures:
i) When an importer desires to pay duty under protest, he shall make an endorsement to that effect on the reverse of the original Bill of entry/EDI form and also furnish the grounds on which duty is paid under protest.
ii) Such Bills of entry containing the above mentioned endorsement shall be submitted to the respective Group Appraiser and Asst./Deputy Commissioners of Customs for counter-signature.
iii) Importers/Clearing Agents shall present such Bills of entry to the centralized Unit (Refunds Section) for registration.
iv) The Centralised Unit i.e., Refund Section shall register the particulars of Bills of Entry etc including the grounds on which duty is paid under protest in a separate register and also assign the Serial No. and date on the Original, duplicate and triplicate copies of Bills of Entry.
v) Importers/Custom House Agents shall ensure that protest stamp is affixed on the original, duplicate and triplicate copies of Bills of entry etc. by the Refunds Section and also see that the Serial No. with date is entered in the Bills of Entry etc. countersigned by the Officers atleast in the level of Deputy Office Superintendent of the Refund Section.
Sd/-
(JOSEPH DOMINIC)
COMMISSIONER OF CUSTOMS(SEA PORT)
F.No.Misc.169/2001 – Enq.
Custom House, Chennai –1.
Dated:21.01.2002
// ATTESTED //
(S. SANKARAVADIVELU)
DY. COMMISSIONER OF CUSTOMS(ENQ)
Back to Main Index
OFFICE OF THE COMMISSIONER OF CUSTOMS, CUSTOM HOUSE
33, RAJAJI SALAI, CHENNAI – 600 001.
PUBLIC NOTICE 7 /2002
Sub: Registering of protest for payment of duty by Importers – Reg.
********
Attention of the importers, Custom House Agents and members of the trading public is invited to this Office Public Notice No.128/76 and 159/85 regarding registration of protest wherever Customs Duty is paid under protest. In continuation of these public Notices, this P.N. is issued.
2. Instances have come to notice that the importers are registering their protest in a simple letter form without adhering the procedure setout in the said Public Notices. Such simple protests in payment of duty without observing the conditions laid down in the above Public Notices and the following procedures cannot be construed as protest and noclaim whatsoever can be made based on such simple protests. Therefore, the Importers / Custom House Agents are instructed to adhere to the following procedures:
i) When an importer desires to pay duty under protest, he shall make an endorsement to that effect on the reverse of the original Bill of entry/EDI form and also furnish the grounds on which duty is paid under protest.
ii) Such Bills of entry containing the above mentioned endorsement shall be submitted to the respective Group Appraiser and Asst./Deputy Commissioners of Customs for counter-signature.
iii) Importers/Clearing Agents shall present such Bills of entry to the centralized Unit (Refunds Section) for registration.
iv) The Centralised Unit i.e., Refund Section shall register the particulars of Bills of Entry etc including the grounds on which duty is paid under protest in a separate register and also assign the Serial No. and date on the Original, duplicate and triplicate copies of Bills of Entry.
v) Importers/Custom House Agents shall ensure that protest stamp is affixed on the original, duplicate and triplicate copies of Bills of entry etc. by the Refunds Section and also see that the Serial No. with date is entered in the Bills of Entry etc. countersigned by the Officers atleast in the level of Deputy Office Superintendent of the Refund Section.
Sd/-
(JOSEPH DOMINIC)
COMMISSIONER OF CUSTOMS(SEA PORT)
F.No.Misc.169/2001 – Enq.
Custom House, Chennai –1.
Dated:21.01.2002
// ATTESTED //
(S. SANKARAVADIVELU)
DY. COMMISSIONER OF CUSTOMS(ENQ)
Back to Main Index
Saturday, October 20, 2007
Refund of duty for Re-export cargo,whether it is drawback under section 74 or refund of duty under section 27 of the Customs Act 1962
This depends on case to case basis for the goods in question.At what stage of Asseement, cleared for Home-consumption or not,whether payment has acquired the characteristics of the duty, whether it is repair or return cargo,whether ,it is temporary import of the machinary,etc,would decide whether it is refund case or drawback case.
The conceptually if the goods are exported goods then it is draw back case and if they are imported goods then it is case of the refund.
what is imported goods?
If goods were not cleared for Home consumption. Then the goods remained Imported goods only .You have to file refund claim for any duty paid on such imported cargo.
But the payment has not acquired the characteristics of the duty and it is deposit in anticipation of duty liability.
The provision of Section 27 are attracted only for Refund of duty and not for Refund of duty deposit. In the present case, the goods were not cleared for Home consumption. No passing of duty incidence can take place, as good never crossed Customs barrier. Even Assessment was not completed.
This depends on case to case basis for the goods in question.At what stage of Asseement, cleared for Home-consumption or not,whether payment has acquired the characteristics of the duty, whether it is repair or return cargo,whether ,it is temporary import of the machinary,etc,would decide whether it is refund case or drawback case.
The conceptually if the goods are exported goods then it is draw back case and if they are imported goods then it is case of the refund.
what is imported goods?
If goods were not cleared for Home consumption. Then the goods remained Imported goods only .You have to file refund claim for any duty paid on such imported cargo.
But the payment has not acquired the characteristics of the duty and it is deposit in anticipation of duty liability.
The provision of Section 27 are attracted only for Refund of duty and not for Refund of duty deposit. In the present case, the goods were not cleared for Home consumption. No passing of duty incidence can take place, as good never crossed Customs barrier. Even Assessment was not completed.
Friday, October 19, 2007
Whether refund is to be filed directly before the AC/DC(Refund) ??
The eligibility of refund can be decided either by the proper assessing officer or the appellate authority is the current stand of the Customs department.Before the Priya Blue and Flock India cases, all refund claim were filed before the AC/DC(Refund) without going to route of Appellate forum.The main contention is that the equal adjudication authority of Refund cannot sit in the matter decided by the Group AC/DC.The assessment is final and filing a refund claim is a challenge to the assessment order.
But, whether the Assistant Commissioner of Customs (Refund) is the proper adjudication authority for the purpose of a refund claim under Customs Act 1962?
Eligibility of Refund Claim
The Assistant Commissioner of Customs (Refund) is not sitting over the Judgement of equal Quasi-Judicial Authority.The Assistant Commissioner of Customs of Refund section is a different quasi-judicial authority than the Assistant Commissioner of Customs or Deputy Commissioner of Customs of Assessing Group. Both of them have separate jurisdiction for adjudication under the Customs Act 1962.
The Assistant Commissioner of Customs (Refund) exercise power under section 27 of the Customs Act whereas the Assistant / Deputy Commissioner of Customs of the Assessing Group exercise power under section’s 17 and 18 of the Customs Act.
Under the Customs Act, various adjudication authority pass various orders on the basis of same order of assessment for the imported goods. This is illustrated below.
Let us understand who is Adjudication authority.
The Adjudication authority have been defined under section 2 of the Customs Act 1962 as ``
In this Act, unless the context otherwise requires. (1) “Adjudication Authority” means any authority competent to pass any order or decision under this Act, but does not include the Board, (Commissioner (Appeal) or Appellate Tribunal). ``
How is the Customs works? .It is more like sequence assembly operations .
The bill of entry in relation to the imported goods is presented to the Assessing Group. The Assistant / Deputy Commissioner of Customs of the Group may assess under first or second appraisement .
In case of the first appraisement, the Assistant /Deputy Commissioner of Examination gives the examination report. The concerned Assistant /Deputy Commissioner of the Group assess the goods based on the examination report of the Assistant /Deputy Commissioner of the Examination section.
Therefore, even, the Assistant /Deputy Commissioner (Group) and Assistant /Deputy Commissioner (Examination) both are equal quasi-judicial authority but the Assistant /Deputy Commissioner (Group) pass order of assessment based on the Assistant /Deputy Commissioner (Examination) report.
Similarly, under second Appraisement, on some occasion, the Assistant /Deputy Commissioner (Group) re-assess the goods based on the Assistant /Deputy Commissioner (Examination) report. This re-assessment of goods may involve change in classification, valuation and adjudication proceedings, as the case may be.
Further, in case of assessment for related party transaction, the Assistant /Deputy Commissioner (Group) assess the goods provisionally under section 18 of the Customs Act. Another adjudication authority is namely Assistant /Deputy Commissioner of the Special Valuation Branch (SVB) who investigate the related party transactional value. Based on the order of Assistant /Deputy Commissioner (SVB), the goods are finally assessed with or without loading of value by the concerned Assistant /Deputy Commissioner (Group). Moreover, the jurisdiction of the order of the Assistant /Deputy Commissioner (SVB) in matter of the particular related party have all India implication. Hence, even though Assistant /Deputy Commissioner (Group) and Assistant /Deputy Commissioner (SVB) are equal quasi-judicial authority, the Assistant /Deputy Commissioner (Group) pass the order of assessment based on the order of valuation issued by the Assistant /Deputy Commissioner (SVB).
Identically, all the refund claim, drawback claim and project finalisation cases are settled only after the concurrence of the Assistant /Deputy Commissioner in charge of Audit. Therefore, the Assistant /Deputy Commissioner, who are passing refund order, settling drawback claim and finalizing the project import are of same level quasi-judicial authority as the Assistant /Deputy Commissioner in charge of the Audit. All such orders are not amounting res Judicata.
The Assistant Commissioner of refund section is proper quasi-judicial authority in case of refund claim as per rules and relevant section of the Customs Act 1962. Any person can file refund claim where he has paid excess duty in pursuance of an order of assessment or borne by him. Therefore, refund claim can be filed after the order of assessment. There is a time limit to do so.
As far as eligibility of refund claim is considered, the Assistant Commissioner (Refund) may seek opinion from the concerned Assistant /Deputy Commissioner (Group), as done, at the time of assessment by the Assistant /Deputy Commissioner (Group), based on report of Assistant /Deputy Commissioner (Examination), Assistant /Deputy Commissioner (SVB) and Assistant /Deputy Commissioner (Audit), as the case may be.
It is arbitrary and discriminatory to ask to take appellate forum without processing refund claim as per provision of the Customs Act 1962.
Under Section 122 of the Customs Act 1962, there are three class of adjudication authorities for confiscation and penalties namely a Gazetted officer of Customs lower rank than an Assistant Commissioner of Customs (AC), than Assistant /Deputy Commissioner and lastly Commissioner of Customs or a Joint commissioner of customs, based on value of goods liable for confiscation.
But for assessment of goods and passing refund order, there is no value limit for Assistant /Deputy Commissioner of the Customs.
Various orders and decisions are passed by respective Assistant /Deputy Commissioner, being adjudication authority under various sections of the Customs Act 1962. At times, order passed by an Assistant /Deputy Commissioner becomes input for other Assistant /Deputy Commissioner orders. As in the instant case, the order of assessment passed by Assistant /Deputy Commissioner (Group) is input for Assistant /Deputy Commissioner (Refund) to process claim. In another words, if there is no order of assessment, then no refund claim to process. Hence, refund claim is based on order of assessment and not on the Order-in-Appeal. The refund claim based on Order-in-Appeal does not suffer any time limit under section 27 of the Customs Act 1962 based on duty payment date .
The eligibility of refund can be decided either by the proper assessing officer or the appellate authority is the current stand of the Customs department.Before the Priya Blue and Flock India cases, all refund claim were filed before the AC/DC(Refund) without going to route of Appellate forum.The main contention is that the equal adjudication authority of Refund cannot sit in the matter decided by the Group AC/DC.The assessment is final and filing a refund claim is a challenge to the assessment order.
But, whether the Assistant Commissioner of Customs (Refund) is the proper adjudication authority for the purpose of a refund claim under Customs Act 1962?
Eligibility of Refund Claim
The Assistant Commissioner of Customs (Refund) is not sitting over the Judgement of equal Quasi-Judicial Authority.The Assistant Commissioner of Customs of Refund section is a different quasi-judicial authority than the Assistant Commissioner of Customs or Deputy Commissioner of Customs of Assessing Group. Both of them have separate jurisdiction for adjudication under the Customs Act 1962.
The Assistant Commissioner of Customs (Refund) exercise power under section 27 of the Customs Act whereas the Assistant / Deputy Commissioner of Customs of the Assessing Group exercise power under section’s 17 and 18 of the Customs Act.
Under the Customs Act, various adjudication authority pass various orders on the basis of same order of assessment for the imported goods. This is illustrated below.
Let us understand who is Adjudication authority.
The Adjudication authority have been defined under section 2 of the Customs Act 1962 as ``
In this Act, unless the context otherwise requires. (1) “Adjudication Authority” means any authority competent to pass any order or decision under this Act, but does not include the Board, (Commissioner (Appeal) or Appellate Tribunal). ``
How is the Customs works? .It is more like sequence assembly operations .
The bill of entry in relation to the imported goods is presented to the Assessing Group. The Assistant / Deputy Commissioner of Customs of the Group may assess under first or second appraisement .
In case of the first appraisement, the Assistant /Deputy Commissioner of Examination gives the examination report. The concerned Assistant /Deputy Commissioner of the Group assess the goods based on the examination report of the Assistant /Deputy Commissioner of the Examination section.
Therefore, even, the Assistant /Deputy Commissioner (Group) and Assistant /Deputy Commissioner (Examination) both are equal quasi-judicial authority but the Assistant /Deputy Commissioner (Group) pass order of assessment based on the Assistant /Deputy Commissioner (Examination) report.
Similarly, under second Appraisement, on some occasion, the Assistant /Deputy Commissioner (Group) re-assess the goods based on the Assistant /Deputy Commissioner (Examination) report. This re-assessment of goods may involve change in classification, valuation and adjudication proceedings, as the case may be.
Further, in case of assessment for related party transaction, the Assistant /Deputy Commissioner (Group) assess the goods provisionally under section 18 of the Customs Act. Another adjudication authority is namely Assistant /Deputy Commissioner of the Special Valuation Branch (SVB) who investigate the related party transactional value. Based on the order of Assistant /Deputy Commissioner (SVB), the goods are finally assessed with or without loading of value by the concerned Assistant /Deputy Commissioner (Group). Moreover, the jurisdiction of the order of the Assistant /Deputy Commissioner (SVB) in matter of the particular related party have all India implication. Hence, even though Assistant /Deputy Commissioner (Group) and Assistant /Deputy Commissioner (SVB) are equal quasi-judicial authority, the Assistant /Deputy Commissioner (Group) pass the order of assessment based on the order of valuation issued by the Assistant /Deputy Commissioner (SVB).
Identically, all the refund claim, drawback claim and project finalisation cases are settled only after the concurrence of the Assistant /Deputy Commissioner in charge of Audit. Therefore, the Assistant /Deputy Commissioner, who are passing refund order, settling drawback claim and finalizing the project import are of same level quasi-judicial authority as the Assistant /Deputy Commissioner in charge of the Audit. All such orders are not amounting res Judicata.
The Assistant Commissioner of refund section is proper quasi-judicial authority in case of refund claim as per rules and relevant section of the Customs Act 1962. Any person can file refund claim where he has paid excess duty in pursuance of an order of assessment or borne by him. Therefore, refund claim can be filed after the order of assessment. There is a time limit to do so.
As far as eligibility of refund claim is considered, the Assistant Commissioner (Refund) may seek opinion from the concerned Assistant /Deputy Commissioner (Group), as done, at the time of assessment by the Assistant /Deputy Commissioner (Group), based on report of Assistant /Deputy Commissioner (Examination), Assistant /Deputy Commissioner (SVB) and Assistant /Deputy Commissioner (Audit), as the case may be.
It is arbitrary and discriminatory to ask to take appellate forum without processing refund claim as per provision of the Customs Act 1962.
Under Section 122 of the Customs Act 1962, there are three class of adjudication authorities for confiscation and penalties namely a Gazetted officer of Customs lower rank than an Assistant Commissioner of Customs (AC), than Assistant /Deputy Commissioner and lastly Commissioner of Customs or a Joint commissioner of customs, based on value of goods liable for confiscation.
But for assessment of goods and passing refund order, there is no value limit for Assistant /Deputy Commissioner of the Customs.
Various orders and decisions are passed by respective Assistant /Deputy Commissioner, being adjudication authority under various sections of the Customs Act 1962. At times, order passed by an Assistant /Deputy Commissioner becomes input for other Assistant /Deputy Commissioner orders. As in the instant case, the order of assessment passed by Assistant /Deputy Commissioner (Group) is input for Assistant /Deputy Commissioner (Refund) to process claim. In another words, if there is no order of assessment, then no refund claim to process. Hence, refund claim is based on order of assessment and not on the Order-in-Appeal. The refund claim based on Order-in-Appeal does not suffer any time limit under section 27 of the Customs Act 1962 based on duty payment date .
Monday, March 05, 2007
Ground for Refunds
On import or export of goods, at times, it is found that duty has been paid in excess of what was actually leviable on the goods. Such excess payment may be due to lack of information on the part of importer/exporter or non-submission of documents required for claim of lower value or rate of duty. Sometimes, such excess payment of duty may be due to shortage/short landing, pilferage of goods or even incorrect assessment of duty by Customs.
who can claim Refund
In such cases, refund of excess amount of duty paid can be claimed by the importer or exporter. If any excess interest has been paid by the importer/exporter on the amount of duty paid in excess, its refund can also be claimed. Section 27 of the Customs Act, 1962 refers in this regard.
The refund of any duty and interest, can be claimed either by a person who has paid the duty in pursuance to an order of assessment or a person who has borne the duty.
Procedure to claim Refund
Any person claiming refund of any duty or interest, has to make an application in duplicate in the form as prescribed in the Customs Refund Application(Form) Regulations, 1995, to the jurisdictional Deputy/Assistant Commissioner of Customs.
Time limitation to file Refund
Such application is to be made before the expiry of six months from the date of payment of duty and interest. However, in case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, application for refund can be made before the expiry of one year from the date of payment of duty and interest.
2. The application for refund is required to be filed with documentary or other evidence including documents relating to assessment, sales invoice and other like documents to support the claim that the duty and interest was paid in excess, incidence of duty or interest has not been passed on by him to any other person, and the refund has not been obtained already.
3. Where on scrutiny, the application is found to be complete in all respects, the Customs issues an acknowledgement in the prescribed Form as per the Customs Refund Application(Form) Regulations, 1995. However, in case the application is found to be incomplete, the Customs has to return the application to the applicant, pointing out the deficiency. The applicant has to re-submit the application after making good the deficiency, for scrutiny by Customs again for admissibility of the refund claim.
Relevant dates for submission of a refund application:
4. As stated above, application for refund is required to be filed within six months from the date of payment of duty and interest and in case of any import made by an individual for his personal use or by Government or by an educational, research or charitable institution or hospital, application for refund is to be filed within one year from the date of payment of duty and interest. However, the limitation of one year or six months, as the case may be, does not apply where any duty and interest has been paid under protest. Normally, the time limit of six months or one year is computed from the date of payment of duty, however, in following situations, such time limit is computed differently:
(a) In case of goods which are exempt from payment of duty by an ad-hoc exemption order issued under sub-section (2) of section 25 of the Act, the limitation of one year or six months, as the case may be, is to be computed from the date of issue of such order;
(b) Where any duty is paid provisionally under section 18 of the Act, the limitation of one year or six months, as the case may be, is to be computed from the date of adjustment of duty after the final assessment thereof;
(c) The date of payment of any duty and interest in relation to a person, other than the importer shall be 'the date of purchase of goods' by such person.
Processing of refund claim :
5. The application of refund found to be complete in all respects by Customs, is processed to see if the whole or any part of the duty and interest paid by the applicant is refundable. In case, the whole or any part of the duty and interest is found to be refundable, an order for refund is passed. However, in view of the provisions of unjust enrichment enshrined in the Customs Act, the amount found refundable has to be transferred to the Consumer Welfare Fund. Only in following situations, the amount of duty and interest found refundable, instead of being credited to the Consumer Welfare Fund, is to be paid to the applicant:
(a) if the importer has not passed on the incidence of such duty and interest to any other person;
(b) if imports were made by an individual for his personal use;
(c) if the buyer who has borne the duty and interest, has not passed on the incidence of such duty and interest to any other person;
(d) if amount found refundable relates to export duty paid on goods which has returned to exporter as specified in section 26;
(e) if amount relates to drawback of duty payable under section 74 and 75;
(f) if the duty or interest was borne by a class of applicants which has been notified for such purpose in the Official Gazette by the Central Government.
Interest on delayed refund :
6. The Customs has to finalize refund claims immediately after receipt of the refund application in proper form along-with all the documents. In case, any duty ordered to be refunded to an applicant is not refunded within 3 months from the date of receipt of application for refund, an interest @ 15% is to be paid to the applicant. The interest is to be paid for the period from the date immediately after the expiry of 3 months from the date of receipt of such application till be date of refund of such duty. For the purpose of payment of interest, the application is deemed to have been received on the date on which a complete application, as acknowledged by the proper officer of Customs, has been made.
7. Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal or any Court against an order of the Assistant Commissioner/Deputy Commissioner of Customs, the order passed by the Commissioner (Appeals), Appellate Tribunal or by the Court, as the case may be is deemed to be an order for the purpose of payment of interest on delayed refund.
8. The interest on delayed refund is payable only in respect of delayed refunds of Customs duty and no interest is payable in respect of deposits such as deposits for project imports, security for provisional release of goods etc.
(Reference : The Customs Refund Application (Form) Regulations, 1995 issued vide notification no. 34/95(NT)-Customs, dated 26/5/1995, Notifications no. 32/95(NT)-Customs, dated 26/5/1995. Circular No. 59/95-Cus., dated 5/6/1995)
On import or export of goods, at times, it is found that duty has been paid in excess of what was actually leviable on the goods. Such excess payment may be due to lack of information on the part of importer/exporter or non-submission of documents required for claim of lower value or rate of duty. Sometimes, such excess payment of duty may be due to shortage/short landing, pilferage of goods or even incorrect assessment of duty by Customs.
who can claim Refund
In such cases, refund of excess amount of duty paid can be claimed by the importer or exporter. If any excess interest has been paid by the importer/exporter on the amount of duty paid in excess, its refund can also be claimed. Section 27 of the Customs Act, 1962 refers in this regard.
The refund of any duty and interest, can be claimed either by a person who has paid the duty in pursuance to an order of assessment or a person who has borne the duty.
Procedure to claim Refund
Any person claiming refund of any duty or interest, has to make an application in duplicate in the form as prescribed in the Customs Refund Application(Form) Regulations, 1995, to the jurisdictional Deputy/Assistant Commissioner of Customs.
Time limitation to file Refund
Such application is to be made before the expiry of six months from the date of payment of duty and interest. However, in case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, application for refund can be made before the expiry of one year from the date of payment of duty and interest.
2. The application for refund is required to be filed with documentary or other evidence including documents relating to assessment, sales invoice and other like documents to support the claim that the duty and interest was paid in excess, incidence of duty or interest has not been passed on by him to any other person, and the refund has not been obtained already.
3. Where on scrutiny, the application is found to be complete in all respects, the Customs issues an acknowledgement in the prescribed Form as per the Customs Refund Application(Form) Regulations, 1995. However, in case the application is found to be incomplete, the Customs has to return the application to the applicant, pointing out the deficiency. The applicant has to re-submit the application after making good the deficiency, for scrutiny by Customs again for admissibility of the refund claim.
Relevant dates for submission of a refund application:
4. As stated above, application for refund is required to be filed within six months from the date of payment of duty and interest and in case of any import made by an individual for his personal use or by Government or by an educational, research or charitable institution or hospital, application for refund is to be filed within one year from the date of payment of duty and interest. However, the limitation of one year or six months, as the case may be, does not apply where any duty and interest has been paid under protest. Normally, the time limit of six months or one year is computed from the date of payment of duty, however, in following situations, such time limit is computed differently:
(a) In case of goods which are exempt from payment of duty by an ad-hoc exemption order issued under sub-section (2) of section 25 of the Act, the limitation of one year or six months, as the case may be, is to be computed from the date of issue of such order;
(b) Where any duty is paid provisionally under section 18 of the Act, the limitation of one year or six months, as the case may be, is to be computed from the date of adjustment of duty after the final assessment thereof;
(c) The date of payment of any duty and interest in relation to a person, other than the importer shall be 'the date of purchase of goods' by such person.
Processing of refund claim :
5. The application of refund found to be complete in all respects by Customs, is processed to see if the whole or any part of the duty and interest paid by the applicant is refundable. In case, the whole or any part of the duty and interest is found to be refundable, an order for refund is passed. However, in view of the provisions of unjust enrichment enshrined in the Customs Act, the amount found refundable has to be transferred to the Consumer Welfare Fund. Only in following situations, the amount of duty and interest found refundable, instead of being credited to the Consumer Welfare Fund, is to be paid to the applicant:
(a) if the importer has not passed on the incidence of such duty and interest to any other person;
(b) if imports were made by an individual for his personal use;
(c) if the buyer who has borne the duty and interest, has not passed on the incidence of such duty and interest to any other person;
(d) if amount found refundable relates to export duty paid on goods which has returned to exporter as specified in section 26;
(e) if amount relates to drawback of duty payable under section 74 and 75;
(f) if the duty or interest was borne by a class of applicants which has been notified for such purpose in the Official Gazette by the Central Government.
Interest on delayed refund :
6. The Customs has to finalize refund claims immediately after receipt of the refund application in proper form along-with all the documents. In case, any duty ordered to be refunded to an applicant is not refunded within 3 months from the date of receipt of application for refund, an interest @ 15% is to be paid to the applicant. The interest is to be paid for the period from the date immediately after the expiry of 3 months from the date of receipt of such application till be date of refund of such duty. For the purpose of payment of interest, the application is deemed to have been received on the date on which a complete application, as acknowledged by the proper officer of Customs, has been made.
7. Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal or any Court against an order of the Assistant Commissioner/Deputy Commissioner of Customs, the order passed by the Commissioner (Appeals), Appellate Tribunal or by the Court, as the case may be is deemed to be an order for the purpose of payment of interest on delayed refund.
8. The interest on delayed refund is payable only in respect of delayed refunds of Customs duty and no interest is payable in respect of deposits such as deposits for project imports, security for provisional release of goods etc.
(Reference : The Customs Refund Application (Form) Regulations, 1995 issued vide notification no. 34/95(NT)-Customs, dated 26/5/1995, Notifications no. 32/95(NT)-Customs, dated 26/5/1995. Circular No. 59/95-Cus., dated 5/6/1995)
Monday, October 09, 2006
Many times excess duty is paid to the Customs department.As per law, the government has to collect neither less duty nor more duty from any person than the legally due.If any excess duty is paid to the goverment than the same is refundable.Intrest is also paid if the refund of duty is delayed than the legally prescribed time.
Refund of customs duty is govrerned by the section 27 of the Customs Act 1962.
Refund of customs duty is govrerned by the section 27 of the Customs Act 1962.
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