SAD Refund - Limitation when Assessments are Provisional
AS per Notification No 102/2007-Cus dated 14.09.2007, if the goods imported are for subsequent sale, the importers are entitled for refund of the Additional Duty of Customs levied under sub-section 5 of Section 3 of the Customs Tariff Act, 1975 Popularly known as SAD). Initially there was no time limit for claiming the refund under Notification No 102/2007, but vide amending Notification No 93/2008 Cus dated 01.08.2008, the time limit for claiming the refund has been prescribed as “before the expiry of one year from the date of making payment of the said additional duty of customs”.
But what if the assessments are provisional?
Board in Circular No. , Dated: July 29, 2010 had clarified that 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 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.
This Circular and the amendment were challenged in a High Court on the ground 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.
The High Court in its judgement delivered on 13th September 2013, observed, "A notification cannot restrict the benefit or impose more rigorous or severe terms than the one prescribed under the Act. Notification can 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 . 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.”
So, the High Court held:
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 by the notification dated 1st August, 2008 read with Circular No. 23/2010-Custom dated 29th July, 2010 .
The SAD refund sadly had been in controversy right from Day One for the simple reason that no officer in the department likes to give refund.
We will bring you the High Court order tomorrow.