Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
% Judgment reserved on : 29 July, 2013
th
Judgment pronounced on: 13 September, 2013
+ W.P.(C) 5120/2011
PIONEER INDIA ELECTRONICS (P) LTD. ..... Petitioner
Through Mr. Sukumar Pattjoshi,
Senior Advocate with
Mr.S.K.Dubey, Mr.Zeeshan
Khan and Ms.Anuradha
Salhotra, Advocates
versus
UNION OF INDIA & ANR. ..... Respondents
Through Ms.Sonia Sharma, Adv for
Union of India.
Mr.Anshuman Chowdhury,
Advocate for R-2
CORAM:
HON’BLE MR. JUSTICE SANJIV KHANNA
HON’BLE MR. JUSTICE SANJEEV SACHDEVA
SANJEEV SACHDEVA, J.
1. The petitioner has filed the present petition impugning
the Circular No.23/2010-Customs dated 29.7.2010 and
the notification No. 93/2008-Customs dated 1.8.2008.
The petitioner further prays for setting aside of the
orders dated 21.3.2011 and 27.4.2011 passed by the
Commissioner of Customs (Appeals) relying on the
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impugned Circular No. 23/2010-Customs dated
29.7.2010 and further sought a writ of mandamus
seeking refund of the provisional duty paid amounting
to Rs. 94,43,216/-.
2. The petitioner M/s Pioneer India Electronics Private
Limited was incorporated in the year 2008 and is
subsidiary of Pioneer Corporation, Japan. The
petitioner is engaged in the import and marketing of
Pioneer branded products in India.
3. The petitioner imported several electrical goods falling
under the first schedule of the Customs Tariff Act,
1975 (hereinafter referred to as, the Act). The goods
were cleared after payment of provisional duty.
4. As it was a case of a related party transaction,
Customs Authorities referred the case to the Special
Valuation Branch of the Customs for the purposes of
valuation and clearance. Pending valuation by the
Special Valuation Branch, all bills of Entry were
cleared by the Customs Authorities provisionally under
Section 18 of the Act. After valuation by the Special
Valuation Branch of the Customs, the liability was
determined and the importer i.e. the petitioner then
applied for finalisation of the Bill of Entry. On the
finalisation of the Bill of Entry, the final duty was
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assessed and the provisional duty paid was adjusted
towards the final assessment. The said procedure is
followed in related party transactions. In case, any
additional duty is payable on final adjudication, the
importer is liable to pay the same and where the
provisional duty is more than the final duty assessed
the importer is entitled to the refund of the same.
5. On 14.09.2007 notification No. 102/2007-Customs was
issued by the Ministry of Finance, Government of India
in exercise of powers conferred by Sub-section 1 of
Section 25 of the Act. Vide the said notification, the
Central Government exempted the goods falling within
the first schedule to the Customs Tariff Act, 1975
when imported into India for subsequent sale from the
whole of the additional duty of Customs leviable
thereon under Sub-section 5 of Section 3 of the said
Customs Tariff Act. The exemption contained in the
notification was subject to the fulfilment of the
following conditions:
―(a) the importer of the said goods shall pay
all duties, including the said additional duty
of customs leviable thereon, as applicable,
at the time of importation of the goods;
(b) the importer, while issuing the invoice
for sale of the said goods, shall specifically
indicate in the invoice that in respect of the
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WP(C) 5120/2011 Page 3 of 36
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 importer shall file a claim for refund
of the said additional duty of customs paid
on the imported goods with the jurisdictional
customs officer;
(d) the importer shall pay on sale of the
said pay on sale of the said goods,
appropriate sales tax or value added tax, as
the case may be;
(e) the importer shall, inter alia, provide
copies of the following documents
alongwith the refund claim:
I. Document evidencing payment of the
said additional duty;
II. Invoices of sale 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.‖
th
6. In this notification dated 14 September, 2007, no
period of limitation was prescribed for making an
application for refund of CVD. The notification
postulated furnishing of documents evidencing
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WP(C) 5120/2011 Page 4 of 36
payment of additional duty, invoices of sale of
imported goods for which refund of additional duty was
claimed and evidence of payment of appropriate sales
tax or value added tax. The absence of stipulation of
any period of limitation leads to the clear implication
that the refund would be processed under Section 27
of the Act. This aspect has been addressed below.
7. On 28.04.2008 the Central Board of Excise and
Customs issued Circular No. 6 of 2008-Customs, on
account of various representations being made by the
importers, exporters, Trade and Industry Association
and had reference from some of the Customs Fields
Formations. One of the issues dealt with by the said
circular related to the fixation of time limit for filing an
application for refund. In respect of the same, the
circular provided as under:
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
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WP(C) 5120/2011 Page 5 of 36
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
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WP(C) 5120/2011 Page 6 of 36
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.‖
(underlining supplied)
8. Circular No. 6/2008 dated 16th April, 2008 noticed that
no specific time limit was fixed in notification dated
14th September, 2007. Doubts had been expressed
as to whether Section 27 of the Act would apply. The
circular purports to clarify that in the absence of
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WP(C) 5120/2011 Page 7 of 36
specific stipulation in the notification, which made
Section 27 of the Act applicable, the time limit
prescribed in Section 27 of the Act would not be
applicable automatically. This statement in the
circular according to us is incorrect. Section 27 of the
Act applies because of the statute i.e. the Act and
does not require clutches of a notification for
application. The aforesaid clarification in form of a
circular can be also challenged and questioned to the
extent that it withdraws or curtails beneficial provisions
of Section 27 of the Act. The circular records that
representations had been received from the importers,
who had found it difficult to dispose of the exported
goods and complete the requisite documentation
within the normal period of six months. This period of
six months is specified in Section 27 of the Act. The
Board keeping in view the aforesaid factors had
decided to permit importers to file claims for exemption
upto a period of one year, i.e., the time limit specified
in Section 27 of six months, was extended to one year,
but with certain stipulations, namely;
(i) Unsold stock would not be eligible for
refund;
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WP(C) 5120/2011 Page 8 of 36
(ii) For one bill of exchange a single
applicable would be maintainable;
(iii) The claim would be entertained on
monthly basis, i.e., single refund claim
irrespective of number of bills of entry
processed in that month by the
respective Commissionerate;
(iv) The refund claims would be normally
disposed of within three months;
9. Subsequent to the issuance of circular No. 6 of 2008
the Central Government issued a notification No.
93/2008 on 1.8.2008. The notification No. 93/2008
amended paragraph 2(c) is as under:
―Paragraph 2(c) prior to the amendment
read as:
― the importer shall file a claim for refund of
the said additional duty of customs paid on
the imported goods with the jurisdictional
custom officer.”
Paragraph 2(c) after the amendment read
as:
“the importer shall file a claim for refund of
the said additional duty of customs paid on
the imported goods with the jurisdictional
customs officer before the expiry of one
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WP(C) 5120/2011 Page 9 of 36
year from the date of payment of the said
additional duty of customs.”
(Underlining supplied)
10. This is the new notification issued by the Central
Government on 1st August, 2008, which made
amendment to paragraph 2 (c) of the earlier
notification dated 14th September, 2007. Instead of
time limit being fixed by the circular, the time limit for
making claim for refund of additional duty was
specified in the notification itself. The time limit as
prescribed for making the said claim was one year
from the date of payment of the additional duty on
customs.
11. Observing that divergent practices were being
followed as regard sanction of the refund claims in
cases where the assessments were provisional, the
Central Government issued circular No.23 of 2010-
Customs on 29.7.2010. The Circular inter alia
provided as under:
―3. The matter has been examined in the
Board. As per the Board Circular
No.6/2008-Customs dated 28.4.2008, the
limitation of time under Section 27 of the
Customs Act, 1962 is not applicable in
cases relating to refund claims of 4% CVD.
The refund of 4% CVD is admissible in
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WP(C) 5120/2011 Page 10 of 36
terms of Notification No.102/2007-Customs
dated 14.9.2007 read with Notification
No.93/2008-Customs dated 1.8.2008
issued under Section 25(1) of the Customs
Act, 1962 subject to fulfilment of certain
conditions as envisaged in the said
notifications. The time limit prescribed for
the purpose of 4% CVD refund claim is one
year from the date of payment of duty as
per the said Notifications. Hence, in cases
where the assessment is provisional, for
the purpose of sanction of refund of 4%
CVD, the date of payment of duty would be,
the date of payment of CVD at the time of
import of goods and not the date of
finalization of provisional assessment. The
Importer, therefore, would be eligible to get
the refund, if the claims is filed within one
year of the date of actual payment of 4%
CVD i.e. the date of payment of duty at the
time of clearance of imported goods.‖
(Underlining supplied)
th
12. Circular dated 29 July, 2010 seeks to explain
st
notification No. 93 of 2008 dated 1 August, 2008 and
states as under:
(i) Limitation of time specified for refunds
under Section 27 of the Act is not
applicable.
(ii) Claims of refunds of 4% CVD under
Circular dated 28th April, 2008 should be
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WP(C) 5120/2011 Page 11 of 36
filed within one year of payment of duty,
whether the assessment was provisional or
final was immaterial.
The reason given is that the notification has been
issued under Section 25(1) of the Act and is subject to
fulfilment of certain conditions; one of them being that
the claim for refund should be made within one year
from the date of payment of duty. Thus, in cases
where assessment was provisional, date of payment of
duty for CVD would be the actual date of payment and
not the date of finalization of provisional assessment.
In other words, the order finalizing the assessment will
not determine the limitation of one year for refund of
duty. The date of finalization of assessment is,
therefore, rendered inconsequential. The importer is
entitled to refund only if the claim is made within one
year from the date of payment of actual duty, whether
it was paid as provisional assessment or on the basis
of final assessment.
13. This notification No. 93 of 2008 and the Circular No.
23/2010–Custom have been impugned in the present
petition.
14. In the present case the petitioner imported various
goods from its related party, i.e., M/s Pioneer
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WP(C) 5120/2011 Page 12 of 36
Corporation, Japan. In the present case three claims
of the petitioner are in issue. The first claim pertains
to an import vide seven bills of exchanges ranging
between 22.12.2008 to 06.03.2009. In respect of
imports made vide these bills of exchanges, the
petitioner provisionally assessed the duty and paid the
same between 31.12.2008 to 13.03.2009. The
assessment of duty, i.e., finalisation of the bill of
exchange was done by the customs authorities on
09.07.2010. The claim with respect to the first set of
bill of exchange was lodged on 30.07.2010.
15. The second set of bill of exchanges range between
27.03.2009 to 12.08.2009 and the provisional duty
was paid between 04.04.2009 to 12.08.2009. These
set of bills of exchange were finalised on 09.07.2010
and the claim for the second set of bill of exchange
was lodged on 22.12.2010.
16. The third set of bill of exchange range between
08.09.2009 to 09.10.2009 and provisional duty was
paid between 15.09.2009 to 14.10.2009. The third set
of bill of exchange was finalized on 09.07.2010 and
the claim with respect to the same was lodged on
27.10.2010.
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17. The first claim pertaining to the first set of bill of
exchange was rejected by the Assistant Commissioner
(Refund) vide order dated 31.10.2010 on the ground
that the refund claim had been filed beyond the
stipulated period of one year of the date of the
payments of the duty at the time of clearance of the
imported goods. The petitioner filed an appeal before
the Commissioner of Customs (Appeals) against the
order dated 30.10.2010 which appeal was further
rejected by the Commissioner of Customs (Appeals)
vide its order dated 21.3.2011 and the said order is
impugned in the present petition also. Similarly, the
second claim of the petitioner for the second set of bill
of exchanges was also rejected by the Assistant
Commissioner (Refund) vide order dated 23.12.2010.
The petitioner filed an appeal against the order dated
23.12.2010 before the Commissioner of
Customs(Appeal) which appeal has also been
dismissed vide order dated 27.4.2011 and the said
order dated 27.4.2011 is also impugned in the present
petition. The third claim filed by the petitioner with
respect to the third set of bill of exchange was also
rejected on the same ground by the Assistant
Commissioner (Refund) vide order dated 28.2.2011
and the petitioner has filed an appeal on 11.4.2011
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WP(C) 5120/2011 Page 14 of 36
against the said order before the Commissioner of
Customs (Appeals).
18. The case of the petitioner is that by the impugned
notification and circular, the Central Government has
created a situation whereby a person would need to
file an application for refund even before the
assessment is finalized as the time limit for making an
application has been prescribed to commence from
the date of payment of the provisional duty for release
of the goods and not the final assessment of duty.
19. Learned counsel for the petitioner further contended
that Section 27 which relates to claim for refund of
duty, period for limitation prescribed is one year or six
months as the case may be from the final assessment
of duty and the impugned notification seeks to change
the period prescribed under the Statute which was
impermissible and contrary to law.
20. In contra learned counsel for the respondent submitted
that the circular and notification had been issued in
exercise of the powers conferred under Section 25 of
the Act and under Section 25 the Government had the
power to grant exemption subject to the certain
conditions and the conditions so prescribed also
stipulated a time limit for seeking refund and as such
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WP(C) 5120/2011 Page 15 of 36
the application for refund had to be made within the
time limit prescribed by notification and circular issued
under Section 25 and that Section 27 had no
application to the claim of refund under the circular
issued under Section 25.
21. The main issue which arises for consideration in the
present petition is whether the Central Government
while imposing conditions for grant of exemption under
Section 25(1) of the Act could lay down conditions in
derogation to the specific statutory provisions and
stipulations contained in Section 27 of the Act.
22. Section 18 provides for provisional assessment of duty
and lays down as under:
―18. Provisional assessment of duty.— (1)
Notwithstanding anything contained in this
Act but without prejudice to the provisions
contained in section 4—
(a) where the proper officer is satisfied that
an importer or exporter is unable to
produce any document or furnish any
information necessary for the assessment
of duty on the imported goods or the export
goods, as the case may be; or
(b) where the proper officer deems it
necessary to subject any imported goods or
export goods to any chemical or other test
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WP(C) 5120/2011 Page 16 of 36
for the purpose of assessment of duty
thereon; or
(c) where the importer or the exporter has
produced all the necessary documents and
furnished full information for the
assessment of duty but the proper officer
deems it necessary to make further enquiry
for assessing the duty,
the proper officer may direct that the duty
leviable on such goods may, pending the
production of such documents or furnishing
of such information or completion of such
test or enquiry, be assessed provisionally if
the importer or the exporter, as the case
may be, furnishes such security as the
proper officer deems fit for the payment of
the deficiency, if any, between the duty
finally assessed and the duty provisionally
assessed.
(2) When the duty leviable on such goods is
assessed finally in accordance with the
provisions of this Act, then—
(a) in the case of goods cleared for home
consumption or exportation, the amount
paid shall be adjusted against the duty
finally assessed and if the amount so paid
falls short of, or is in excess of, [ the duty
finally assessed], the importer or the
exporter of the goods shall pay the
deficiency or be entitled to a refund, as the
case may be;
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(b) in the case of warehoused goods, the
proper officer may, where the duty finally
assessed is in excess of the duty
provisionally assessed, require the importer
to execute a bond, binding himself in a sum
equal to twice the amount of the excess
duty.
(3) The importer or exporter shall be liable
to pay interest, on any amount payable to
the Central Government, consequent to the
final assessment order under sub-section
(2), at the rate fixed by the Central
Government under section 28AB from the
first day of the month in which the duty is
provisionally assessed till the date of
payment thereof.
(4) Subject to sub-section (5), if any
refundable amount referred to in clause (a)
of sub-section (2) is not refunded under
that sub-section within three months from
the date of assessment, of duty finally,
there shall be paid an interest on such
unrefunded amount at such rate fixed by
the Central Government under section 27A
till the date of refund of such amount.
(5) The amount of duty refundable under
sub-section (2) and the interest under sub-
section (4), if any, shall, instead of being
credited to the Fund, be paid to the
importer or the exporter, as the case may
be, if such amount is relatable to –
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WP(C) 5120/2011 Page 18 of 36
(a) the duty and interest, if any,
paid on such duty paid by the importer,
or the exporter, as the case may be, if
he had not passed on the incidence of
such duty and interest, if any, paid on
such duty to any other person;
(b) the duty and interest, if any, paid
on such duty on imports made by an
individual for his personal use;
(c) the duty and interest, if any, paid
on such duty borne by the buyer, if he
had not passed on the incidence of
such duty and interest, if any, paid on
such duty to any other person;
(d) the export duty as specified in
section 26;
(e) drawback of duty payable under
sections 74 and 75.‖
23. Section 25 of the Act lays down as under:-
― 25. Power to grant exemption from
duty.— (1) If the Central Government is
satisfied that it is necessary in the public
interest so to do, it may, by notification in
the Official Gazette, exempt generally
either absolutely or subject to such
conditions (to be fulfilled before or after
clearance) as may be specified in the
notification goods of any specified
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WP(C) 5120/2011 Page 19 of 36
description from the whole or any part of
duty of customs leviable thereon.
(2) If the Central Government is satisfied
that it is necessary in the public interest so
to do, it may, by special order in each case,
exempt from the payment of duty, under
circumstances of an exceptional nature to
be stated in such order, any goods on
which duty is leviable.
(2A) The Central Government may, if it
considers it necessary or expedient so to
do for the purpose of clarifying the scope or
applicability of any notification issued under
sub-section (1) or order issued under sub-
section (2) insert any explanation in such
notification or order, as the case may be,
by notification in the Official Gazette at any
time within one year of issue of the
notification under sub-section (1) or order
under sub-section (2), and every such
explanation shall have effect as if it had
always been the part of the first such
notification or order, as the case may be.
(3) An exemption under sub- section (i) or
sub- section (1) in respect of any goods
from any part of the duty of customs
leviable thereon (the duty of customs
leviable thereon being hereinafter referred
to as the statutory, duty) may be granted by
providing for the levy of a duty On such
goods at a rate expressed in a form or
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WP(C) 5120/2011 Page 20 of 36
method different from the form or method in
which the statutory duty is leviable and any
exemption granted in relation to any goods
in the manner Provided in this sub- section
shall have effect subject to the condition
that the duty of customs chargeable on
such goods shall in no case exceed the
statutory duty.
Explanation. -" Form or method", in relation
to a rate of duty of customs, means the
basis, namely, valuation, weight, number,
length, area, volume or other measure with
reference to which the duty .
(4) Every notification issued under sub-
section (1) or sub-section 92A) shall,--
(a) Unless otherwise provided, come into
force on the date of its issue by the Central
Government for publication in the Official
Gazette;
(b) also be published and offered for sale
on the date of its issue by the Directorate of
Publicity and Public Relations of the Board,
New Delhi.
(5) Notwithstanding anything contained in
sub-section (4), where a notification comes
into force on a date later than the date of its
issue, the same shall be published and
offered for sale by the said Directorate of
Publicity and Public Relations on a date on
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WP(C) 5120/2011 Page 21 of 36
or before the date on which the said
notification comes into force.
(6) Notwithstanding anything contained in
this Act, no duty shall be collected if the
amount of duty leviable is equal to, or less
than, one hundred rupees.‖
24. Section 27 of the Customs Act lays down as Under:
―27 Claim for refund of duty.— (1) Any
person claiming refund of any duty –
(i) paid by him in pursuance of an
order of assessment; or
(ii) borne by him,
may make an application for refund of such
[ duty and interest, if any, paid on such
duty] to the [Assistant Commissioner of
Customs or Deputy Commissioner of
Customs]—
(a) in the 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,
before the expiry of one year;
(b) in any other case, before the
expiry of six months,
from the date of payment of [ duty and
interest, if any, paid on such duty] [in such
form and manner] as may be specified in
the regulations made in this behalf and the
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WP(C) 5120/2011 Page 22 of 36
application shall accompanied by such
documentary or other evidence (including
the documents referred to in section 28C)
as the applicant may furnish to establish
that the amount of [ duty and interest, if
any, paid on such duty] in relation to which
such refund is claimed was collected from,
or paid by, him and the incidence of such [
duty and interest, if any, paid on such duty]
had not been passed on by him to any
other person:
Provided that where an application for
refund has been made before the
commencement of the Central Excises and
Customs Laws (Amendment) Act, 1991,
such application shall be deemed to have
been made under this sub-section and the
same shall be dealt with in accordance with
the provisions of sub- section (2):
Provided further that the limitation of
one year or six months, as the case may
be, shall not apply where any [ duty and
interest, if any, paid on such duty] has been
paid under protest:
[Provided also that in the case of
goods which are exempt from payment of
duty by a special order issued under sub-
section (2) of section 25, the limitation of
one year or six months, as the case may
be, shall be computed from the date of
issue of such order]:
[Provided also that where the duty
becomes refundable as a consequence of
judgment, decree, order or direction of the
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WP(C) 5120/2011 Page 23 of 36
appellate authority, Appellate Tribunal or
any court, the limitation of one year or six
months, as the case may be, shall be
computed from the date of such judgment,
decree, order or direction.]
Explanation [I] . – For the purposes of
this sub- section," the date of payment of [
duty and interest, if any, paid on such duty]
in relation to a person, other than the
importer, shall be construed as" the date of
purchase of goods" by such person.
[ Explanation II.— Where any duty is
paid provisionally under section 18, the
limitation of one year or six months, as the
case may be, shall be computed from the
date of adjustment of duty after the final
assessment thereof.]
25. Before we elucidate upon Section 18, we would like to
examine the provisions of Section 25 of the Act. The
said Section empowers the Central Government to
issue a notification in the Gazette and exempt
generally either absolutely or subject to such
conditions, which may have to be fulfilled before or
after clearance of the goods, from the customs from
whole or any part of customs duty leviable thereon. It
is important to note that the notification can only grant
exemption absolutely or subject to certain conditions.
Thus, notification under Section 25(1) has to be liberal,
indulgent or benevolent and reduce/delimit the rigours
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WP(C) 5120/2011 Page 24 of 36
of the statute. Imposition of increased or higher tax by
a notification under Section 25 is impermissible and
prohibited. Only exemption can be granted but harsher
or higher duty or more rigorous or harsher terms than
those mentioned and stipulated under the Act cannot
be imposed and stipulated.
26. Sub-section (3) of section 25 clarifies and affirms that
notification issued under sub-section (1) shall be
subject to the condition that the duty on customs
chargeable on such goods shall not exceed the
statutory duties. Sub-section (3) further states that the
notification under Section 25(1) can relate to rate of
duty expressed in a form or method different from the
form or method in which the statutory duty is leviable,
but subject to the condition that the rate of duty shall
not exceed the statutory duty. The words ―form or
method‖ as per the explanation mean, basis of the
duty, i.e., valuation, weight, number, length, area,
volume or any other measure but explanation does not
refer to the time limit and the right of the Government,
by issue of a notification, to reduce the statutory time
limit for claim of refund in Section 27 of the Act.
27. The word ―exemption‖ as used in sub-section (1) to
Section 25 can and should include extension or
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WP(C) 5120/2011 Page 25 of 36
increase in time but cannot be stretched and
expounded to include power of the Government to, by
a circular, reduce the statutory time for a claim of
refund stipulated under the principal enactment, i.e.,
the Customs Act, 1962. That would make the circular
ultra vires the statute and beyond the scope of the Act,
Rules etc. Circulars might depart from the strict
tenure of the statutory provision and might mitigate
rigours of law thereby granting administrative relief
beyond terms of the relevant provisions of the statute,
but the Central Government is not empowered to
withdraw benefits or impose harsher or stricter
conditions than those postulated by the statute. In
later cases, circulars can supplant the law but not
supplement the law.
28. Section 27 of the Act is a general provision relating to
refund of any duty. Dictionary meaning of the word
‗any‘ can indicate ‗all‘ or ‗every‘ as well as ‗some‘ or
‗one‘. Usage depends upon the context of subject
matter. In the context of Section 27 of the Act, the
word ‗any duty‘ should and would encompass ‗all‘ and
‗every‘ type of refund payable under the Act and in
terms of the notification issued under Section 25.
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WP(C) 5120/2011 Page 26 of 36
29. Third proviso to Section 27 clears any possible
ambiguity and this proviso refers to special order
under Section 25(2), which is like a notification and
states that the period of limitation of one year or six
months as the case may be, shall be computed from
the date of issue of such order. Contention of the
respondent that notification under Section 25 must
specifically invoke Section 27 is misconceived.
Notification under Section 25 of the Act is issued
under the statute i.e. the principal enactment itself and
refund of duty under Section 27 means and includes
any type of refund whether payable in view of
appellate orders, adjudication order or pursuant to a
notification or exemption etc. Bare perusal of Section
27(1), indicates the wide amplitude and the broad
parameters under which the said provision operates.
The provision is not applicable or restricted to refund
pursuant to a decree, judgment, order or direction of
the appellate authority, tribunal etc. The very fact that
th
the first notification dated 14 September, 2007 issued
under Section 25 of the Act did not refer or prescribe
any period of limitation, is sufficient to reject the
contention that Section 27 of the Act is not applicable
to notifications. The question under which provision
th
and time limit refund under the notification dated 14
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WP(C) 5120/2011 Page 27 of 36
September, 2007 was payable, cannot be and is not
answered by the respondents. Subsequent circular
th
dated 28 April, 2008 was issued nearly after seven
months of the notification.
st
30. Notification dated 1 August, 2008 refers to the
expression the ‗date of payment‘ of said additional
duty of customs and the limitation period fixed is one
year from the said date. The expression used in
Section 27(1) is ―from the date of payment of duty and
interest, if any, paid on such duty‖. The connotation of
the words ‗date of payment‘ is identical in the
st
notification dated 1 August, 2008 and in sub-clause
(1) to Section 27 of the Act. Explanation I to Section
27 clarifies the position and states that for any duty
paid provisionally under Section 18, the limitation
period as applicable shall be computed from the date
of adjustment of duty after final assessment. Thus,
the expression ‗date of payment of duty‘ used in sub-
clause (1) to Section 27 has to be read with
Explanation II i.e. the date of adjustment of duty after
final assessment and not the date on which duty was
paid provisionally under Section 18.
31. Section 18 of the Act, postulates payment of duty
which is ad-hoc or interim duty which is paid but
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WP(C) 5120/2011 Page 28 of 36
subject to final assessment. Ultimately, the duty
payable is determined and decided by final
assessment and the said determination is mandatory,
when provisional assessment is made. Difference
between the final duty payable and provisional duty
paid will either result in a demand or a refund. Until
final assessment is done, the duty paid is merely
provisional and not fully ascertained or quantified. It
can fluctuate.
32. The reason why explanation II to Section 27 refers to
final assessment and not provisional assessment is
apparent and logical. Till final adjudication order is
passed and duty is ascertained, quantum of the duty
paid or payable is uncertain. The amount of refund will
be determinable upon final assessment and not earlier.
Even when there is an exemption and duty is
refundable post import, the refund cannot be
ascertained and will be fluctuating till final assessment
order is passed. The quantum of refund would depend
upon the final adjudication and not upon provisional
assessment. No person can lodge a claim for refund
without knowing or quantifying the amount which is to
be refunded. As per the final adjudication, refund
may not be payable, or quantum thereof may increase
or decrease.
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WP(C) 5120/2011 Page 29 of 36
33. Explanation II to Section 27 should not create any
difficulty as one should expect that the final
adjudication order would be passed within a
reasonable time or shortly after provisional
assessment.
34. In the present case, for the three claim of the
petitioner, the relevant dates are as under:
th
% Judgment reserved on : 29 July, 2013
th
Judgment pronounced on: 13 September, 2013
+ W.P.(C) 5120/2011
PIONEER INDIA ELECTRONICS (P) LTD. ..... Petitioner
Through Mr. Sukumar Pattjoshi,
Senior Advocate with
Mr.S.K.Dubey, Mr.Zeeshan
Khan and Ms.Anuradha
Salhotra, Advocates
versus
UNION OF INDIA & ANR. ..... Respondents
Through Ms.Sonia Sharma, Adv for
Union of India.
Mr.Anshuman Chowdhury,
Advocate for R-2
CORAM:
HON’BLE MR. JUSTICE SANJIV KHANNA
HON’BLE MR. JUSTICE SANJEEV SACHDEVA
SANJEEV SACHDEVA, J.
1. The petitioner has filed the present petition impugning
the Circular No.23/2010-Customs dated 29.7.2010 and
the notification No. 93/2008-Customs dated 1.8.2008.
The petitioner further prays for setting aside of the
orders dated 21.3.2011 and 27.4.2011 passed by the
Commissioner of Customs (Appeals) relying on the
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WP(C) 5120/2011 Page 1 of 36
impugned Circular No. 23/2010-Customs dated
29.7.2010 and further sought a writ of mandamus
seeking refund of the provisional duty paid amounting
to Rs. 94,43,216/-.
2. The petitioner M/s Pioneer India Electronics Private
Limited was incorporated in the year 2008 and is
subsidiary of Pioneer Corporation, Japan. The
petitioner is engaged in the import and marketing of
Pioneer branded products in India.
3. The petitioner imported several electrical goods falling
under the first schedule of the Customs Tariff Act,
1975 (hereinafter referred to as, the Act). The goods
were cleared after payment of provisional duty.
4. As it was a case of a related party transaction,
Customs Authorities referred the case to the Special
Valuation Branch of the Customs for the purposes of
valuation and clearance. Pending valuation by the
Special Valuation Branch, all bills of Entry were
cleared by the Customs Authorities provisionally under
Section 18 of the Act. After valuation by the Special
Valuation Branch of the Customs, the liability was
determined and the importer i.e. the petitioner then
applied for finalisation of the Bill of Entry. On the
finalisation of the Bill of Entry, the final duty was
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WP(C) 5120/2011 Page 2 of 36
assessed and the provisional duty paid was adjusted
towards the final assessment. The said procedure is
followed in related party transactions. In case, any
additional duty is payable on final adjudication, the
importer is liable to pay the same and where the
provisional duty is more than the final duty assessed
the importer is entitled to the refund of the same.
5. On 14.09.2007 notification No. 102/2007-Customs was
issued by the Ministry of Finance, Government of India
in exercise of powers conferred by Sub-section 1 of
Section 25 of the Act. Vide the said notification, the
Central Government exempted the goods falling within
the first schedule to the Customs Tariff Act, 1975
when imported into India for subsequent sale from the
whole of the additional duty of Customs leviable
thereon under Sub-section 5 of Section 3 of the said
Customs Tariff Act. The exemption contained in the
notification was subject to the fulfilment of the
following conditions:
―(a) the importer of the said goods shall pay
all duties, including the said additional duty
of customs leviable thereon, as applicable,
at the time of importation of the goods;
(b) the importer, while issuing the invoice
for sale of the said goods, shall specifically
indicate in the invoice that in respect of the
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WP(C) 5120/2011 Page 3 of 36
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 importer shall file a claim for refund
of the said additional duty of customs paid
on the imported goods with the jurisdictional
customs officer;
(d) the importer shall pay on sale of the
said pay on sale of the said goods,
appropriate sales tax or value added tax, as
the case may be;
(e) the importer shall, inter alia, provide
copies of the following documents
alongwith the refund claim:
I. Document evidencing payment of the
said additional duty;
II. Invoices of sale 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.‖
th
6. In this notification dated 14 September, 2007, no
period of limitation was prescribed for making an
application for refund of CVD. The notification
postulated furnishing of documents evidencing
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WP(C) 5120/2011 Page 4 of 36
payment of additional duty, invoices of sale of
imported goods for which refund of additional duty was
claimed and evidence of payment of appropriate sales
tax or value added tax. The absence of stipulation of
any period of limitation leads to the clear implication
that the refund would be processed under Section 27
of the Act. This aspect has been addressed below.
7. On 28.04.2008 the Central Board of Excise and
Customs issued Circular No. 6 of 2008-Customs, on
account of various representations being made by the
importers, exporters, Trade and Industry Association
and had reference from some of the Customs Fields
Formations. One of the issues dealt with by the said
circular related to the fixation of time limit for filing an
application for refund. In respect of the same, the
circular provided as under:
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
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WP(C) 5120/2011 Page 5 of 36
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
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WP(C) 5120/2011 Page 6 of 36
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.‖
(underlining supplied)
8. Circular No. 6/2008 dated 16th April, 2008 noticed that
no specific time limit was fixed in notification dated
14th September, 2007. Doubts had been expressed
as to whether Section 27 of the Act would apply. The
circular purports to clarify that in the absence of
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WP(C) 5120/2011 Page 7 of 36
specific stipulation in the notification, which made
Section 27 of the Act applicable, the time limit
prescribed in Section 27 of the Act would not be
applicable automatically. This statement in the
circular according to us is incorrect. Section 27 of the
Act applies because of the statute i.e. the Act and
does not require clutches of a notification for
application. The aforesaid clarification in form of a
circular can be also challenged and questioned to the
extent that it withdraws or curtails beneficial provisions
of Section 27 of the Act. The circular records that
representations had been received from the importers,
who had found it difficult to dispose of the exported
goods and complete the requisite documentation
within the normal period of six months. This period of
six months is specified in Section 27 of the Act. The
Board keeping in view the aforesaid factors had
decided to permit importers to file claims for exemption
upto a period of one year, i.e., the time limit specified
in Section 27 of six months, was extended to one year,
but with certain stipulations, namely;
(i) Unsold stock would not be eligible for
refund;
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WP(C) 5120/2011 Page 8 of 36
(ii) For one bill of exchange a single
applicable would be maintainable;
(iii) The claim would be entertained on
monthly basis, i.e., single refund claim
irrespective of number of bills of entry
processed in that month by the
respective Commissionerate;
(iv) The refund claims would be normally
disposed of within three months;
9. Subsequent to the issuance of circular No. 6 of 2008
the Central Government issued a notification No.
93/2008 on 1.8.2008. The notification No. 93/2008
amended paragraph 2(c) is as under:
―Paragraph 2(c) prior to the amendment
read as:
― the importer shall file a claim for refund of
the said additional duty of customs paid on
the imported goods with the jurisdictional
custom officer.”
Paragraph 2(c) after the amendment read
as:
“the importer shall file a claim for refund of
the said additional duty of customs paid on
the imported goods with the jurisdictional
customs officer before the expiry of one
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WP(C) 5120/2011 Page 9 of 36
year from the date of payment of the said
additional duty of customs.”
(Underlining supplied)
10. This is the new notification issued by the Central
Government on 1st August, 2008, which made
amendment to paragraph 2 (c) of the earlier
notification dated 14th September, 2007. Instead of
time limit being fixed by the circular, the time limit for
making claim for refund of additional duty was
specified in the notification itself. The time limit as
prescribed for making the said claim was one year
from the date of payment of the additional duty on
customs.
11. Observing that divergent practices were being
followed as regard sanction of the refund claims in
cases where the assessments were provisional, the
Central Government issued circular No.23 of 2010-
Customs on 29.7.2010. The Circular inter alia
provided as under:
―3. The matter has been examined in the
Board. As per the Board Circular
No.6/2008-Customs dated 28.4.2008, the
limitation of time under Section 27 of the
Customs Act, 1962 is not applicable in
cases relating to refund claims of 4% CVD.
The refund of 4% CVD is admissible in
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WP(C) 5120/2011 Page 10 of 36
terms of Notification No.102/2007-Customs
dated 14.9.2007 read with Notification
No.93/2008-Customs dated 1.8.2008
issued under Section 25(1) of the Customs
Act, 1962 subject to fulfilment of certain
conditions as envisaged in the said
notifications. The time limit prescribed for
the purpose of 4% CVD refund claim is one
year from the date of payment of duty as
per the said Notifications. Hence, in cases
where the assessment is provisional, for
the purpose of sanction of refund of 4%
CVD, the date of payment of duty would be,
the date of payment of CVD at the time of
import of goods and not the date of
finalization of provisional assessment. The
Importer, therefore, would be eligible to get
the refund, if the claims is filed within one
year of the date of actual payment of 4%
CVD i.e. the date of payment of duty at the
time of clearance of imported goods.‖
(Underlining supplied)
th
12. Circular dated 29 July, 2010 seeks to explain
st
notification No. 93 of 2008 dated 1 August, 2008 and
states as under:
(i) Limitation of time specified for refunds
under Section 27 of the Act is not
applicable.
(ii) Claims of refunds of 4% CVD under
Circular dated 28th April, 2008 should be
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WP(C) 5120/2011 Page 11 of 36
filed within one year of payment of duty,
whether the assessment was provisional or
final was immaterial.
The reason given is that the notification has been
issued under Section 25(1) of the Act and is subject to
fulfilment of certain conditions; one of them being that
the claim for refund should be made within one year
from the date of payment of duty. Thus, in cases
where assessment was provisional, date of payment of
duty for CVD would be the actual date of payment and
not the date of finalization of provisional assessment.
In other words, the order finalizing the assessment will
not determine the limitation of one year for refund of
duty. The date of finalization of assessment is,
therefore, rendered inconsequential. The importer is
entitled to refund only if the claim is made within one
year from the date of payment of actual duty, whether
it was paid as provisional assessment or on the basis
of final assessment.
13. This notification No. 93 of 2008 and the Circular No.
23/2010–Custom have been impugned in the present
petition.
14. In the present case the petitioner imported various
goods from its related party, i.e., M/s Pioneer
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WP(C) 5120/2011 Page 12 of 36
Corporation, Japan. In the present case three claims
of the petitioner are in issue. The first claim pertains
to an import vide seven bills of exchanges ranging
between 22.12.2008 to 06.03.2009. In respect of
imports made vide these bills of exchanges, the
petitioner provisionally assessed the duty and paid the
same between 31.12.2008 to 13.03.2009. The
assessment of duty, i.e., finalisation of the bill of
exchange was done by the customs authorities on
09.07.2010. The claim with respect to the first set of
bill of exchange was lodged on 30.07.2010.
15. The second set of bill of exchanges range between
27.03.2009 to 12.08.2009 and the provisional duty
was paid between 04.04.2009 to 12.08.2009. These
set of bills of exchange were finalised on 09.07.2010
and the claim for the second set of bill of exchange
was lodged on 22.12.2010.
16. The third set of bill of exchange range between
08.09.2009 to 09.10.2009 and provisional duty was
paid between 15.09.2009 to 14.10.2009. The third set
of bill of exchange was finalized on 09.07.2010 and
the claim with respect to the same was lodged on
27.10.2010.
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WP(C) 5120/2011 Page 13 of 36
17. The first claim pertaining to the first set of bill of
exchange was rejected by the Assistant Commissioner
(Refund) vide order dated 31.10.2010 on the ground
that the refund claim had been filed beyond the
stipulated period of one year of the date of the
payments of the duty at the time of clearance of the
imported goods. The petitioner filed an appeal before
the Commissioner of Customs (Appeals) against the
order dated 30.10.2010 which appeal was further
rejected by the Commissioner of Customs (Appeals)
vide its order dated 21.3.2011 and the said order is
impugned in the present petition also. Similarly, the
second claim of the petitioner for the second set of bill
of exchanges was also rejected by the Assistant
Commissioner (Refund) vide order dated 23.12.2010.
The petitioner filed an appeal against the order dated
23.12.2010 before the Commissioner of
Customs(Appeal) which appeal has also been
dismissed vide order dated 27.4.2011 and the said
order dated 27.4.2011 is also impugned in the present
petition. The third claim filed by the petitioner with
respect to the third set of bill of exchange was also
rejected on the same ground by the Assistant
Commissioner (Refund) vide order dated 28.2.2011
and the petitioner has filed an appeal on 11.4.2011
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WP(C) 5120/2011 Page 14 of 36
against the said order before the Commissioner of
Customs (Appeals).
18. The case of the petitioner is that by the impugned
notification and circular, the Central Government has
created a situation whereby a person would need to
file an application for refund even before the
assessment is finalized as the time limit for making an
application has been prescribed to commence from
the date of payment of the provisional duty for release
of the goods and not the final assessment of duty.
19. Learned counsel for the petitioner further contended
that Section 27 which relates to claim for refund of
duty, period for limitation prescribed is one year or six
months as the case may be from the final assessment
of duty and the impugned notification seeks to change
the period prescribed under the Statute which was
impermissible and contrary to law.
20. In contra learned counsel for the respondent submitted
that the circular and notification had been issued in
exercise of the powers conferred under Section 25 of
the Act and under Section 25 the Government had the
power to grant exemption subject to the certain
conditions and the conditions so prescribed also
stipulated a time limit for seeking refund and as such
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WP(C) 5120/2011 Page 15 of 36
the application for refund had to be made within the
time limit prescribed by notification and circular issued
under Section 25 and that Section 27 had no
application to the claim of refund under the circular
issued under Section 25.
21. The main issue which arises for consideration in the
present petition is whether the Central Government
while imposing conditions for grant of exemption under
Section 25(1) of the Act could lay down conditions in
derogation to the specific statutory provisions and
stipulations contained in Section 27 of the Act.
22. Section 18 provides for provisional assessment of duty
and lays down as under:
―18. Provisional assessment of duty.— (1)
Notwithstanding anything contained in this
Act but without prejudice to the provisions
contained in section 4—
(a) where the proper officer is satisfied that
an importer or exporter is unable to
produce any document or furnish any
information necessary for the assessment
of duty on the imported goods or the export
goods, as the case may be; or
(b) where the proper officer deems it
necessary to subject any imported goods or
export goods to any chemical or other test
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WP(C) 5120/2011 Page 16 of 36
for the purpose of assessment of duty
thereon; or
(c) where the importer or the exporter has
produced all the necessary documents and
furnished full information for the
assessment of duty but the proper officer
deems it necessary to make further enquiry
for assessing the duty,
the proper officer may direct that the duty
leviable on such goods may, pending the
production of such documents or furnishing
of such information or completion of such
test or enquiry, be assessed provisionally if
the importer or the exporter, as the case
may be, furnishes such security as the
proper officer deems fit for the payment of
the deficiency, if any, between the duty
finally assessed and the duty provisionally
assessed.
(2) When the duty leviable on such goods is
assessed finally in accordance with the
provisions of this Act, then—
(a) in the case of goods cleared for home
consumption or exportation, the amount
paid shall be adjusted against the duty
finally assessed and if the amount so paid
falls short of, or is in excess of, [ the duty
finally assessed], the importer or the
exporter of the goods shall pay the
deficiency or be entitled to a refund, as the
case may be;
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WP(C) 5120/2011 Page 17 of 36
(b) in the case of warehoused goods, the
proper officer may, where the duty finally
assessed is in excess of the duty
provisionally assessed, require the importer
to execute a bond, binding himself in a sum
equal to twice the amount of the excess
duty.
(3) The importer or exporter shall be liable
to pay interest, on any amount payable to
the Central Government, consequent to the
final assessment order under sub-section
(2), at the rate fixed by the Central
Government under section 28AB from the
first day of the month in which the duty is
provisionally assessed till the date of
payment thereof.
(4) Subject to sub-section (5), if any
refundable amount referred to in clause (a)
of sub-section (2) is not refunded under
that sub-section within three months from
the date of assessment, of duty finally,
there shall be paid an interest on such
unrefunded amount at such rate fixed by
the Central Government under section 27A
till the date of refund of such amount.
(5) The amount of duty refundable under
sub-section (2) and the interest under sub-
section (4), if any, shall, instead of being
credited to the Fund, be paid to the
importer or the exporter, as the case may
be, if such amount is relatable to –
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WP(C) 5120/2011 Page 18 of 36
(a) the duty and interest, if any,
paid on such duty paid by the importer,
or the exporter, as the case may be, if
he had not passed on the incidence of
such duty and interest, if any, paid on
such duty to any other person;
(b) the duty and interest, if any, paid
on such duty on imports made by an
individual for his personal use;
(c) the duty and interest, if any, paid
on such duty borne by the buyer, if he
had not passed on the incidence of
such duty and interest, if any, paid on
such duty to any other person;
(d) the export duty as specified in
section 26;
(e) drawback of duty payable under
sections 74 and 75.‖
23. Section 25 of the Act lays down as under:-
― 25. Power to grant exemption from
duty.— (1) If the Central Government is
satisfied that it is necessary in the public
interest so to do, it may, by notification in
the Official Gazette, exempt generally
either absolutely or subject to such
conditions (to be fulfilled before or after
clearance) as may be specified in the
notification goods of any specified
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WP(C) 5120/2011 Page 19 of 36
description from the whole or any part of
duty of customs leviable thereon.
(2) If the Central Government is satisfied
that it is necessary in the public interest so
to do, it may, by special order in each case,
exempt from the payment of duty, under
circumstances of an exceptional nature to
be stated in such order, any goods on
which duty is leviable.
(2A) The Central Government may, if it
considers it necessary or expedient so to
do for the purpose of clarifying the scope or
applicability of any notification issued under
sub-section (1) or order issued under sub-
section (2) insert any explanation in such
notification or order, as the case may be,
by notification in the Official Gazette at any
time within one year of issue of the
notification under sub-section (1) or order
under sub-section (2), and every such
explanation shall have effect as if it had
always been the part of the first such
notification or order, as the case may be.
(3) An exemption under sub- section (i) or
sub- section (1) in respect of any goods
from any part of the duty of customs
leviable thereon (the duty of customs
leviable thereon being hereinafter referred
to as the statutory, duty) may be granted by
providing for the levy of a duty On such
goods at a rate expressed in a form or
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WP(C) 5120/2011 Page 20 of 36
method different from the form or method in
which the statutory duty is leviable and any
exemption granted in relation to any goods
in the manner Provided in this sub- section
shall have effect subject to the condition
that the duty of customs chargeable on
such goods shall in no case exceed the
statutory duty.
Explanation. -" Form or method", in relation
to a rate of duty of customs, means the
basis, namely, valuation, weight, number,
length, area, volume or other measure with
reference to which the duty .
(4) Every notification issued under sub-
section (1) or sub-section 92A) shall,--
(a) Unless otherwise provided, come into
force on the date of its issue by the Central
Government for publication in the Official
Gazette;
(b) also be published and offered for sale
on the date of its issue by the Directorate of
Publicity and Public Relations of the Board,
New Delhi.
(5) Notwithstanding anything contained in
sub-section (4), where a notification comes
into force on a date later than the date of its
issue, the same shall be published and
offered for sale by the said Directorate of
Publicity and Public Relations on a date on
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WP(C) 5120/2011 Page 21 of 36
or before the date on which the said
notification comes into force.
(6) Notwithstanding anything contained in
this Act, no duty shall be collected if the
amount of duty leviable is equal to, or less
than, one hundred rupees.‖
24. Section 27 of the Customs Act lays down as Under:
―27 Claim for refund of duty.— (1) Any
person claiming refund of any duty –
(i) paid by him in pursuance of an
order of assessment; or
(ii) borne by him,
may make an application for refund of such
[ duty and interest, if any, paid on such
duty] to the [Assistant Commissioner of
Customs or Deputy Commissioner of
Customs]—
(a) in the 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,
before the expiry of one year;
(b) in any other case, before the
expiry of six months,
from the date of payment of [ duty and
interest, if any, paid on such duty] [in such
form and manner] as may be specified in
the regulations made in this behalf and the
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WP(C) 5120/2011 Page 22 of 36
application shall accompanied by such
documentary or other evidence (including
the documents referred to in section 28C)
as the applicant may furnish to establish
that the amount of [ duty and interest, if
any, paid on such duty] in relation to which
such refund is claimed was collected from,
or paid by, him and the incidence of such [
duty and interest, if any, paid on such duty]
had not been passed on by him to any
other person:
Provided that where an application for
refund has been made before the
commencement of the Central Excises and
Customs Laws (Amendment) Act, 1991,
such application shall be deemed to have
been made under this sub-section and the
same shall be dealt with in accordance with
the provisions of sub- section (2):
Provided further that the limitation of
one year or six months, as the case may
be, shall not apply where any [ duty and
interest, if any, paid on such duty] has been
paid under protest:
[Provided also that in the case of
goods which are exempt from payment of
duty by a special order issued under sub-
section (2) of section 25, the limitation of
one year or six months, as the case may
be, shall be computed from the date of
issue of such order]:
[Provided also that where the duty
becomes refundable as a consequence of
judgment, decree, order or direction of the
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WP(C) 5120/2011 Page 23 of 36
appellate authority, Appellate Tribunal or
any court, the limitation of one year or six
months, as the case may be, shall be
computed from the date of such judgment,
decree, order or direction.]
Explanation [I] . – For the purposes of
this sub- section," the date of payment of [
duty and interest, if any, paid on such duty]
in relation to a person, other than the
importer, shall be construed as" the date of
purchase of goods" by such person.
[ Explanation II.— Where any duty is
paid provisionally under section 18, the
limitation of one year or six months, as the
case may be, shall be computed from the
date of adjustment of duty after the final
assessment thereof.]
25. Before we elucidate upon Section 18, we would like to
examine the provisions of Section 25 of the Act. The
said Section empowers the Central Government to
issue a notification in the Gazette and exempt
generally either absolutely or subject to such
conditions, which may have to be fulfilled before or
after clearance of the goods, from the customs from
whole or any part of customs duty leviable thereon. It
is important to note that the notification can only grant
exemption absolutely or subject to certain conditions.
Thus, notification under Section 25(1) has to be liberal,
indulgent or benevolent and reduce/delimit the rigours
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WP(C) 5120/2011 Page 24 of 36
of the statute. Imposition of increased or higher tax by
a notification under Section 25 is impermissible and
prohibited. Only exemption can be granted but harsher
or higher duty or more rigorous or harsher terms than
those mentioned and stipulated under the Act cannot
be imposed and stipulated.
26. Sub-section (3) of section 25 clarifies and affirms that
notification issued under sub-section (1) shall be
subject to the condition that the duty on customs
chargeable on such goods shall not exceed the
statutory duties. Sub-section (3) further states that the
notification under Section 25(1) can relate to rate of
duty expressed in a form or method different from the
form or method in which the statutory duty is leviable,
but subject to the condition that the rate of duty shall
not exceed the statutory duty. The words ―form or
method‖ as per the explanation mean, basis of the
duty, i.e., valuation, weight, number, length, area,
volume or any other measure but explanation does not
refer to the time limit and the right of the Government,
by issue of a notification, to reduce the statutory time
limit for claim of refund in Section 27 of the Act.
27. The word ―exemption‖ as used in sub-section (1) to
Section 25 can and should include extension or
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WP(C) 5120/2011 Page 25 of 36
increase in time but cannot be stretched and
expounded to include power of the Government to, by
a circular, reduce the statutory time for a claim of
refund stipulated under the principal enactment, i.e.,
the Customs Act, 1962. That would make the circular
ultra vires the statute and beyond the scope of the Act,
Rules etc. Circulars might depart from the strict
tenure of the statutory provision and might mitigate
rigours of law thereby granting administrative relief
beyond terms of the relevant provisions of the statute,
but the Central Government is not empowered to
withdraw benefits or impose harsher or stricter
conditions than those postulated by the statute. In
later cases, circulars can supplant the law but not
supplement the law.
28. Section 27 of the Act is a general provision relating to
refund of any duty. Dictionary meaning of the word
‗any‘ can indicate ‗all‘ or ‗every‘ as well as ‗some‘ or
‗one‘. Usage depends upon the context of subject
matter. In the context of Section 27 of the Act, the
word ‗any duty‘ should and would encompass ‗all‘ and
‗every‘ type of refund payable under the Act and in
terms of the notification issued under Section 25.
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WP(C) 5120/2011 Page 26 of 36
29. Third proviso to Section 27 clears any possible
ambiguity and this proviso refers to special order
under Section 25(2), which is like a notification and
states that the period of limitation of one year or six
months as the case may be, shall be computed from
the date of issue of such order. Contention of the
respondent that notification under Section 25 must
specifically invoke Section 27 is misconceived.
Notification under Section 25 of the Act is issued
under the statute i.e. the principal enactment itself and
refund of duty under Section 27 means and includes
any type of refund whether payable in view of
appellate orders, adjudication order or pursuant to a
notification or exemption etc. Bare perusal of Section
27(1), indicates the wide amplitude and the broad
parameters under which the said provision operates.
The provision is not applicable or restricted to refund
pursuant to a decree, judgment, order or direction of
the appellate authority, tribunal etc. The very fact that
th
the first notification dated 14 September, 2007 issued
under Section 25 of the Act did not refer or prescribe
any period of limitation, is sufficient to reject the
contention that Section 27 of the Act is not applicable
to notifications. The question under which provision
th
and time limit refund under the notification dated 14
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WP(C) 5120/2011 Page 27 of 36
September, 2007 was payable, cannot be and is not
answered by the respondents. Subsequent circular
th
dated 28 April, 2008 was issued nearly after seven
months of the notification.
st
30. Notification dated 1 August, 2008 refers to the
expression the ‗date of payment‘ of said additional
duty of customs and the limitation period fixed is one
year from the said date. The expression used in
Section 27(1) is ―from the date of payment of duty and
interest, if any, paid on such duty‖. The connotation of
the words ‗date of payment‘ is identical in the
st
notification dated 1 August, 2008 and in sub-clause
(1) to Section 27 of the Act. Explanation I to Section
27 clarifies the position and states that for any duty
paid provisionally under Section 18, the limitation
period as applicable shall be computed from the date
of adjustment of duty after final assessment. Thus,
the expression ‗date of payment of duty‘ used in sub-
clause (1) to Section 27 has to be read with
Explanation II i.e. the date of adjustment of duty after
final assessment and not the date on which duty was
paid provisionally under Section 18.
31. Section 18 of the Act, postulates payment of duty
which is ad-hoc or interim duty which is paid but
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WP(C) 5120/2011 Page 28 of 36
subject to final assessment. Ultimately, the duty
payable is determined and decided by final
assessment and the said determination is mandatory,
when provisional assessment is made. Difference
between the final duty payable and provisional duty
paid will either result in a demand or a refund. Until
final assessment is done, the duty paid is merely
provisional and not fully ascertained or quantified. It
can fluctuate.
32. The reason why explanation II to Section 27 refers to
final assessment and not provisional assessment is
apparent and logical. Till final adjudication order is
passed and duty is ascertained, quantum of the duty
paid or payable is uncertain. The amount of refund will
be determinable upon final assessment and not earlier.
Even when there is an exemption and duty is
refundable post import, the refund cannot be
ascertained and will be fluctuating till final assessment
order is passed. The quantum of refund would depend
upon the final adjudication and not upon provisional
assessment. No person can lodge a claim for refund
without knowing or quantifying the amount which is to
be refunded. As per the final adjudication, refund
may not be payable, or quantum thereof may increase
or decrease.
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WP(C) 5120/2011 Page 29 of 36
33. Explanation II to Section 27 should not create any
difficulty as one should expect that the final
adjudication order would be passed within a
reasonable time or shortly after provisional
assessment.
34. In the present case, for the three claim of the
petitioner, the relevant dates are as under:
| Provisional<br>payment date | Final<br>Assessment date | Claim lodging<br>date |
|---|---|---|
| 31.12.2008 to<br>13.03.2009 | 09.07.2010 | 30.07.2010 |
| 04.04.2009 to<br>12.08.2009 | 09.07.2010 | 22.12.2010 |
| 15.09.2009 to<br>14.10.2009 | 09.07.2010 | 27.10.2010 |
35. The impugned circular No. 23 of 2010 was issued on
29.07.2010 stipulating a limitation of one year from the
date of payment of the duty at the time of clearance of
the imported goods. If the period in the circular was to
be followed then some of the refund claims of the
petitioner would become time barred and in others
hardly any time would be left for the petitioner to make
a claim.
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WP(C) 5120/2011 Page 30 of 36
36. The problem in the present case has arisen largely
due to failure of the respondents to pass final
adjudication orders which were belatedly made. Bills
th
of exchange between the period 20 December, 2008
th th
to 6 March, 2009; bills of exchange between 27
th
March, 2009 to 12 August, 2009; and bills of
th th
exchange between 8 September, 2009 to 9 October,
th
2009 were finally adjudicated on 9 July, 2010. There
is no explanation for this delay and the cause thereof.
th
37. Circular No. 23 of 2010/custom issued on 7
September, 2010 stipulates that the date of payment
of provisional duty and not the date of final
adjudication is determinative for computing the
limitation period of refund under notification No. 93 of
st
2008 issued on 1 August, 2008, can be faulted for
many reasons. These are as under:
i. As per Section 25(1), Central Government is
empowered to issue a notification granting
exemption i.e. grant exemption generally or
absolutely or subject to conditions from whole or
any part of custom duty leviable on goods. A
notification cannot restrict the benefit or impose
more rigorous or severe terms than the one
prescribed under the Act. Notification can
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WP(C) 5120/2011 Page 31 of 36
liberalise and grant exemption. Indulgence and
benevolence can be an objective of a notification
and restricted or shorter period of refund is not
postulated. Notification cannot impose more
deleterious terms and reduce the period of
limitation for refund of claim. (Sub – section 2A to
Section 25 is not applicable)
ii. Section 27 of the Act prescribes period of
limitation. The period of limitation under the said
Section cannot be curtailed by way of a
notification but a notification can extend and
increase the period of limitation. Similarly, a
circular cannot reduce the period of limitation for
seeking refund stipulated in Section 27 of the Act.
iii. Section 27 applies to all refunds whether due
and payable pursuant to appellate orders or
court orders or otherwise in terms of exemption
notification under Section 25(1) or special orders
under Section 25(2) of the Act.
iv. The expression ‗date of payment‘ used in
notification No. 93 of 2008 dated 1st August,
2008 can mean the date of final assessment.
The said interpretation would be in accordance
and as per explanation II to Section 27. Similar
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WP(C) 5120/2011 Page 32 of 36
expression has been used in Section 27(1).
th
Circular issued on 29 July, 2010 accepts that in
some cases refunds under the notification dated
st
1 August, 2008 had been issued on a claim
being made within one year from date of final
assessment and beyond one year from the date
of provisional assessment. The circular however,
stipulates that the claim for refund would be
st
entertained under the notification dated 1
August, 2008, if it is made within one year from
payment of duty and not final assessment. This,
may result in reducing the period. Assuming
that the issue of date of payment was debatable,
the Board did not deem it appropriate to fix a
period or time limit during which claims of refund
should be entertained in cases where the
Assessee bonafidely believed and were acting
on the presumption that period of one year was
to be computed from the date of final
assessment. The said belief was not ill founded
but based on sound logic and reasoning. The
Board while issuing the circular would have been
fair and just and fixed a time limit during which
past claim of refund could be entertained with a
reference to the date of final assessment.
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WP(C) 5120/2011 Page 33 of 36
38. In view of the above discussion, we feel that it will be
proper to harmoniously construe and interpret
st
notification dated 1 August, 2008 and Section 27
th
read with Circular dated 29 July, 2010 by holding
that an Assessee can make a claim for refund under
st
notification No. 93 of 2008 dated 1 August, 2008
either by filing an application for refund within the
limitation period specified under Section 27 of the
Customs Act, 1962 or within the extended limitation
period of one year from the actual date of payment
even, if the said payment made was pursuant to
provisional assessment. The longer of the two periods
i.e. the period specified under Section 27 or the
st
notification dated 1 August, 2008 read with Circular
th
No. 23/2010–Custom dated 29 July, 2010 would be
applicable.
39. To sum up:
a. where the imported goods are released on
payment of CVD on regular assessment, the
application seeking refund can be made within
one year of the payment of the CVD in terms of
st
the notification dated 1 August, 2008 read with
th
Circular No. 23/2010–Custom dated 29 July,
2010.
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WP(C) 5120/2011 Page 34 of 36
b. where the goods are released on provisional
assessment followed by the final assessment,
the application seeking refund can be made
within the period of one year or six months, as
the case may be, of the final assessment as
stipulated by Explanation II to section 27 of the
Act or within the enlarged period of one year
from the date of provisional release as stipulated
st
by the notification dated 1 August, 2008 read
th
with Circular No. 23/2010–Custom dated 29
July, 2010.
40. The Circular No. 23/2010-Custom in so far as it
stipulates that the provisions of section 27 of the Act
do not apply to the Notification cannot be sustained to
the extent indicated above.
41. In view of the construction given by us to the circular
hereinabove, the Judgment relied upon by the counsel
for the Petitioner of the High Court of Madras in the
case of KSJ Metal Impex Private v. Under Secretary,
Customs and Others in Writ Petition No. 959/2013
decided on 21.01.2013 need not be referred to. Even
otherwise the said judgement is not applicable in the
facts of the present case as the same was dealing with
the issue of interest on delayed refunds.
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WP(C) 5120/2011 Page 35 of 36
42. Since the petitioner has filed the claims within the
period stipulated by section 27 of the Act, in view of
the construction given by us, the same could not have
been rejected on the ground of limitation.
43. In view of the above, the impugned Circular No.
23/2010-Custom to the extent it holds that section 27
of the Act has no application is held ultra-vires the
statute and quashed. The impugned orders dated
21.3.2011 and 27.4.2011 passed by respondent No.2
relying on Circular No. 23/2010-Custom dated
29.07.2010 are hereby set aside and the matter is
remanded to respondent No.2 to assess the claim of
the petitioner for refund on imports and to process the
same in accordance with the provisions of Section 27
of the Act.
44. The writ petition is, accordingly, disposed of with no
order as to costs.
SANJEEV SACHDEVA, J.
th
13 SEPTEMBER, 2013 SANJIV KHANNA, J.
SV
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