Refund of 4% CVD in terms of Notification No.102/2007-Cus – Disposal of claims in r/o cases where assessments are provisional – Board's Instructions
IN TIOL-DDT 1398 09.07.2010, while reporting Board's frantic efforts to clear the backlog of SAD refund claims and Circular No. 18/2010-Cus dated 08.07.2010 issued in this regard to speed up the refunds, we said,
“Board believed that in view of its clarifications issued through earlier Circulars, there would not be any difficulty in timely disposal of refund claims (how naïve it was). However, on review of the status of pending refund claims at major Customs Houses as on 31.03.2010, it was noticed that more than 80% of pending claims relate to 4% CVD cases. In view of this, the Board has launched a special drive for clearing the pending SAD refund claims and came out with the following instructions to further simplify the procedure for claiming 4% CVD refunds.”
By issuing Circular No. 18/2010-Cus, Board launched a special drive to clear the said refund claims pending with various Customs Houses across the country and issued certain instructions to be followed by the field formations to achieve this goal. Within no time i.e. three weeks into this special drive, it appears that the Board has hit a road block thanks to the ingenuity of field formations in raising queries in instalments. This time the field formations wanted the Board to clarify as to what should be regarded as the relevant date for determining the prescribed period of one year in terms of the amending Notification No. 93/2008-Cus when assessments are provisional. While in some Customs Houses, ‘date of payment' of duty is being considered as relevant date for determining the prescribed period of one year, in some other Customs Houses, the date of finalization of provisional assessment is regarded as the relevant date. To resolve this confusion, Board was requested to issue a suitable clarification in order to ensure uniformity in procedure.
After examining the matter Board clarifies that in terms of Circular No. 6/2008-Cus dated 28.04.2008, it was made clear that the time limitation under Section 27 of the Customs Act, 1962 will not be applicable in cases relating to 4% CVD refunds. Board further states that the 4% CVD refund is admissible in terms of Notification No. 102/2007-Cus as amended by Notification No. 93/2008-Cus issued in terms of Section 25(1) of Customs Act, 1962 subject to fulfilment of certain conditions envisaged in the said notifications. As per the said notifications the time limit prescribed for the purpose of the said refund claims is one year from the date of payment of duty. In view of this, 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 claim is filed within one year from the date of actual payment of 4% CVD i.e. the date of payment of duty at the time of clearance of imported goods.
In view of the above clarification, Board directs that all pending 4% CVD refund claims under Notification No. 102/2007-Cus as amended by Notification No. 93/2008-Cus should be disposed of despite the fact that the assessment continues to be provisional without awaiting for finalization of assessments.
It has been almost three years since this benefit was extended to the importers by virtue of this notification and Board overcame one hurdle after another placed by the field formations and issued clarifications to speed up the refund process. Unfortunately, history told us a different story because, the officers in the field devised smarter ways to thwart the noble ideas of the Board. At least for now, let us hope that Board will not be saddled with anymore queries from the field formations and the special drive to clear these refund claims becomes successful.
Now, what will happen if an importer believed that the refund has to be filed only on finalization of provisional assessments (as held in various case laws) and waiting for finalization of the assessments ? The field formations will merrily reject his claim on the ground that it was filed beyond one year from the date of payment of duty by taking shelter under this latest circular. Because of lack of field experience, while removing one hurdle for refund, the Board is unknowingly creating another hurdle.
All this is good. But having dilly dallied for three years to clear the backlog, the Board should seriously consider shelling out interest for delaying the refund claims? Board may conveniently say that this is not provided for in the Notification and hence interest on delayed refunds is ruled out. But equity demands that the department should pay interest for unnecessarily holding back the claims for three years on one pretext or the other.
In TIOL-DDT 1398 we in the context of an application form being prescribed for the purpose of the said refund claims, we also asked a question as follows:
Will the Board clarify as to Part 5 of which Customs Manual the Board is referring to here?
Will the Board clarify?
CBEC Circular No. 23/2010-Cus., Dated: July 29, 2010