Gujarat High Court
M/S New Kamal vs Union Of India on 13 March, 2020
Author: Sonia Gokani
Bench: Sonia Gokani, Gita Gopi
C/SCA/13167/2019 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 13167 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 13171 of 2019
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M/S NEW KAMAL
Versus
UNION OF INDIA
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Appearance:
AMAL PARESH DAVE(8961) for the Petitioner(s) No. 1
MR PARESH M DAVE(260) for the Petitioner(s) No. 1
MR PY DIVYESHVAR(2482) for the Respondent(s) No. 2
NOTICE SERVED(4) for the Respondent(s) No. 1
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CORAM: HONOURABLE MS JUSTICE SONIA GOKANI
and
HONOURABLE MS. JUSTICE GITA GOPI
Date : 13/03/2020
COMMON ORAL ORDER
(PER : HONOURABLE MS JUSTICE SONIA GOKANI)
1. Since both these petitions involve identical question of law and facts, they are heard and adjudicated together by this common order.
2. Drawing the facts from Special Civil Application No.13167 of 2019, it is noticed that the petitioners engaged in the business of trading of used and worn clothes, had purchased mutilated worn clothes from one M/s. Om Siddh Vinayak Impex Pvt. Ltd., located in the Kandla Special Economic Zone. The goods imported in Page 1 of 8 Downloaded on : Sun Jun 14 19:25:52 IST 2020 C/SCA/13167/2019 ORDER India are liable to duties of customs leviable under the Customs Act, 1962 and also additional custom duties leviable under Section 3 of the Customs Tarrif Act, 1975.
2.1 By virtue of Notification No. 102/2007 dated 14.9.2007, the Central Government has granted exemption from 4% Special Additional Duty ('SAD' for short), if the goods were imported in India for their subsequent sale. Since SAD under Section 3(5) of the Customs Tarrif Act is charged for counter balancing Sales Tax, VAT etc. when such goods were subsequently sold in India, exemption is available from the SAD.
2.2 The petitioners were entitled to the refund of 4% SAD paid on the goods purchased from the SEZ unit. Therefore, the petitioners moved refund applications on 19.10.2009, 2.2.2010, 4.12.2010, 22.01.2011, 12.01.2011, 04.11.2010 and 18.01.2011 respectively before the Assistant Commissioner of Customs (Refund).
2.3 The said refund applications were not decided by second respondent therefore, petitioners moved Special Civil Application No. 18948 of 2018 and Special Civil Application No. 18950 of 2018 whereby this Court directed second respondent to decide petitioners' representations and claims for refund within a period of 90 days. In view of this direction, refund claims of the petitioners were sanctioned and the petitioner in Special Civil Application No. 13167 of 2019 has been paid Page 2 of 8 Downloaded on : Sun Jun 14 19:25:52 IST 2020 C/SCA/13167/2019 ORDER amount of Rs.4,38,695/- by order dated 19.3.2019 and Rs.1,93,116/- by order 5.4.2019 whereas petitioner in Special Civil Application No.13171 of 2019 has been paid amount of Rs.18,62,355/- by order dated 10.4.2019. The petitioners are entitled to get interest on the amount of Rs.6,31,811/- and Rs.18,62,355/- respectively for the delayed refund as stipulated under Section 27-A of the Customs Act.
2.4 Various Communications were addressed to the respondent No.2 by the petitioners claiming interest amount under Section 27-A of the Customs Act. However, no response was given by the respondent No.2. The petitioners, therefore, approached this Court by filing two petitions with the following prayers:-
"SCA No. 13167 of 2019.
17(A) That Your Lordships may be pleased to issue a Writ of Certiorari or any other appropriate writ, order directing the 2nd respondent herein to revise and modify the orders dated 19.3.2019 and 5.4.2019 (Annexure "C"), thereby sanctioning and paying statutory interest in the petitioner's favour on refund aggregating to Rs.6,31,811/- sanctioned to the petitioner under these orders;
SCA No. 13171 of 2019 18(A) That Your Lordships may be pleased to issue a Writ of Certiorari or any other appropriate writ, Page 3 of 8 Downloaded on : Sun Jun 14 19:25:52 IST 2020 C/SCA/13167/2019 ORDER order directing the 2nd respondent herein to revise and modify all the four orders dated 10.4.2019 (Annexure "C"), thereby sanctioning and paying statutory interest in the petitioner's favour on refund aggregating to Rs.18,62,335/- sanctioned to the petitioner under these orders;"
3. Upon service of notice, affidavit in reply is filed by other side. We noticed that subject refund claims were submitted by the petitioners on 19.10.2009, 4.12.2010, 22.01.2011, 12.01.2011, 04.11.2010 and 18.01.2011 seeking 4% SAD paid by them at the time of import from unit in Kandla SEZ and Circular No.11/2017 dated 31.3.2017 by CBEC was issued after more than 7 years of filing of applications of refund. According to them interest could not be allowed retrospectively, as the Customs House, Kandla was not empowered to settle the refund claim prior to 31.3.2017. The Standard Operating Procedure ('SOP' for short) is to deal with old cases of refund pending as on the date of coming into effect of the notification dated 31.3.2017 wherein it was directed that SAD is to be refunded by the Customs, Central Excise or Central GST authorities.
4.It is noticed that the gap in procedure was due to the fault that there was no provision of giving refund in SEZ law and that the provision is extended by way of amending SEZ Rules by inserting new Rule 47 (5) Page 4 of 8 Downloaded on : Sun Jun 14 19:25:52 IST 2020 C/SCA/13167/2019 ORDER empowering officers of the custom to issue refund claims and as the past refund cases have been streamlined, delay has been caused. The respondents have not disputed that there is an entitlement on part of the petitioners to get interest as contemplated under Section 27-A of the Customs Act.
5. Heard Mr. P.M. Dave, learned Counsel for the petitioners. All that what is required to be noted is that the petitioners have made claim for refund and if the same was sanctioned after huge delay of 7 years, there can hardly be any fault of the common man doing business in following procedure and law as required.
5.1 He urged that the refund has been issued after more than a decade and interest which is contemplated under the provision of the Customs Act could not have been denied. He urged that by different orders, refund applications have been allowed by the custom authorities.
6. Learned Standing Counsel Mr. P.Y. Divyeshwar, upon instruction does not dispute the entitlement of interest of refund claim. He however, submitted that there are many refund claims pending to process.
7. Even otherwise, it would be profitable to reproduce Section 27-A of the Customs Act, 1962 at this stage which reads thus:-
Page 5 of 8 Downloaded on : Sun Jun 14 19:25:52 IST 2020 C/SCA/13167/2019 ORDER27A. Interest on delayed refunds.--If any duty ordered to be refunded under sub-section (2) of section 27 to an applicant is not refunded within three months from the date of receipt of application under sub-section (1) of that section, there shall be paid to that applicant interest at such rate, [not below five per cent.] and not exceeding thirty per cent. per annum as is for the time being fixed [by the Central Government, by notification in the Official Gazette], on such duty from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty:
Provided that where any duty, ordered to be refunded under sub-section (2) of section 27 in respect of an application under sub-section (1) of that section made before the date on which the Finance Bill, 1995 receives the assent of the President*, is not refunded within three months from such date, there shall be paid to the applicant interest under this section from the date immediately after three months from such date, till the date of refund of such duty.
Explanation.--Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal [, National Tax Tribunal] or any court against an order of the [Assistant Commissioner of Customs or Deputy Commissioner of Customs] under sub-section (2) of section 27, the order passed by the Commissioner (Appeals), Appellate Tribunal [, National Tax Tribunal] or, as the case may be, by the court shall be deemed to be an order passed under that sub-section for the purposes of this section.]
8. From the said provision, it is made clear that if any duty is ordered to be refunded under sub-section (2) of section 27 to an applicant and it is not refunded within three months from the date of receipt of application under sub-section(1), interest is required to be paid to the applicant as may be notified by the Central Government in the Official Gazette. It has been consistently 6% which has been notified by the Central Government. We also Page 6 of 8 Downloaded on : Sun Jun 14 19:25:52 IST 2020 C/SCA/13167/2019 ORDER notice that after receiving that refund amount which is aggregating a sum of Rs.6,31,811/- and Rs.18,62,355/- respectively the petitioners had communicated to the respondent authorities and made request for 6% of interest which, upon calculation, comes to Rs.3,40,321. This has been calculation up to 19.3.2019 and 5.4.2019. For this respective cheque Nos. 543136, 543150 dated 19.3.2019 and 5.4.2019 have been issued for the amount of Rs. 4,38,695/- and 1,93,116/- in case of petitioner in Special Civil Application No.13167 of 2019 whereas cheque Nos. 543156, 543156, 543156, and 543155 dated 11.4.2019 for the amount of Rs.4,92,476, Rs. 4,93,951, Rs. 4,91,040/- and Rs. 3,84,888/- have been issued in case of petitioner in Special Civil application No.13171 of 2019. No reply disputing this calculation in question has been filed by other side. We do not see any other ground except the unclarity of the authority in processing the refund claim. This interdepartmental lack of clarity can hardly effect the right of the parties particularly when there is statutory provision permitting the interest on the refund claim, if the sum is not paid within stipulated time period of 3 months.
9. Resultantly, respondent No.2 is directed to revise and modify the orders dated 19.3.2019, 5.4.2019 and 10.4.2019 also calculate and process statutory interest as to be paid under Section 27-A of the Customs Act and pay to the petitioners within four weeks from the date of Page 7 of 8 Downloaded on : Sun Jun 14 19:25:52 IST 2020 C/SCA/13167/2019 ORDER receipt of certified copy of present order. In case of difficulty petitioners shall be at liberty to revive these petitions.
With aforesaid direction, present petitions stand disposed of accordingly.
Sd/-
(SONIA GOKANI, J) sd/-
(GITA GOPI,J) SURESH SOLANKI Page 8 of 8 Downloaded on : Sun Jun 14 19:25:52 IST 2020