By TIOL News Service

MUMBAI, JAN 12, 2017. THE petitioner prays that the Notification 93/2008-Cus be declared as null and void and ultra vires Article 14 of the Constitution of India.

This notification amended notification 102/2007-Cus thus -

And as a consequence, petitioner seeks a direction to the respondent department to consider their refund claim independent of this substituted condition (c).

The petitioners state that they are engaged in import of Automatic Teller Machines (ATMs) and are clearing the same for installation to State Bank of India, as per the periodical orders by the State Bank of India.

The petitioners submit that though they have imported and cleared all the goods from the JNPT Customs, the subsequent movement of these machines is not in their control. That is restricted by the agreement dated 23.08.2013. The Local Head Office of the State Bank of India has to place local purchase order on the petitioner company, who, in turn, will supply the goods to State Banks, spread over various States in India and then remove to individual sites the imported goods in accordance with the information given by State Bank of India. Thus, depending upon the availability of the sites, these machines are installed thereafter. It is in these circumstances that post import the further events are not within the control of the present petitioners.

It is in this regard that the stipulation with regard to time is questioned by urging that the period of one year stipulated from the date of import pre-supposes that the goods can be sold within this period.

Therefore, the subsequent sale is the triggering point for refund and that is not within the control of the petitioners. There cannot be, therefore, an unreasonable condition to obtain refund. If such conditions as are unreasonable, unfair and unjust are allowed to control the benefit of the exemption Notification, particularly refund, to the extent such stipulation disentitles the petitioners to avail of the exemption notification, that must be struck down.

The petitioners sought refund of SAD paid under the bills of entry in proportion to actual supplies effected. The refund was for the sum of Rs.1,43,76,435/-. The refund application has not been processed. This has deprived the petitioners of the benefit of the exemption Notification.

The petitioner relied on the decision in Sony India Pvt. Ltd = 2014-TIOL-532-HC-DEL-CUS.

The Counsel for the Revenue submitted that there is no vested right in matters of exemption/ relaxation and if at all there is an exemption from the payment of tax or duty and if that is conditional, then, no assessee can argue that he would be entitled to the exemption but not bound by the terms and conditions; that the terms and conditions based on which exemption is granted, cannot be ignored and brushed aside to claim the exemption. In fine, it is urged that the writ petition be dismissed.

While extracting the apex court decision in M. Ambalal & Co. = 2010-TIOL-111-SC-CUS, the High Court adverted inter alia to the provisions of sections 2, 15, 25, 27, 46 of the Customs Act, 1962, the impugned notifications and after expressing its disagreement with the Delhi High Court decision (supra) observed thus -

+ The power to refund is to be found in section 27 of the Customs Act, 1962, and that was always there. The amendment to the notification introducing a limitation for seeking refund apart, section 27 with its condition of a limitation period was throughout on the statute book. That is the only provision enabling granting refund of any duty is undisputed.

+ The notification granting exemption and under consideration in the case, enables claiming a refund of duty (SAD) but the power to grant it is in the substantive law.

+ Further, we find that there is an exemption granted and which is conditional. The exemption being conditional, it is not permissible to pick and choose convenient conditions of the exemption Notification and leave out those which to parties like the petitioners, appear to be onerous and excessive. We do not see how in the teeth of a clear provision in the exemption Notification can the assessee/petitioners before us contend that the exemption Notification is valid for everything else but when it comes to period of limitation therein, that is excessive or unfair, unjust and arbitrary.

+ Once the exemption is conditional, then, all the conditions therein have to be complied with. If that provides for refund, but the application in that behalf is to be made within a specified period, then, that cannot be said to be excessive and arbitrary, far from being unfair, unjust and unreasonable. It cannot be termed illegal as well for the simple reason that subsection (1) of Section 27 of the Customs Act, 1962, which enables claiming of refund by making an application itself speaks of one year outer limit. That is never challenged, including in the present proceedings. That the period of one year commences from the payment of the duty. If that is how Section 27 is worded and every duty is included in its ambit and scope, then, an application seeking refund of the same has to abide by it, including the bar of limitation contained therein.

+ That is how consistent with that provision even the special exemption Notification carries the same stipulation or condition. We do not see how insistence on complying with it can be said to be imposing an unreasonable, unfair and unjust restriction. There is no vested, much less absolute right in the petitioners to seek refund. Even a refund must be within the framework of the statute and admissible on the terms thereof.

+ The petitioners have accepted the position that if this exemption Notification had not been issued in exercise of the statutory power, no exemption could have been claimed at all. In these circumstances, merely because a condition is imposed to file a refund application and which is in the nature of a time-bar or limitation, that cannot be held to be onerous, excessive and, therefore, ultra vires Article 14 of the Constitution.

+ Once the statutory scheme is understood in the proper perspective and as a whole, then, merely because the view taken by the Delhi High Court has not been interfered by the Hon'ble Supreme Court will not enable us to follow it.

+ Refund in the present case could be claimed only after the subsequent sale of the imported goods. If they had not been sold, the refund could not have been claimed at all. If the exemption Notification grants an exemption in the manner noted by us, then, it could have been granted only in that mode and not another.

The writ petition is dismissed.

(See 2017-TIOL-79-HC-MUM-CUS)