Elite Green Pvt Ltd Vs Under Secretary (Customs-III/VI) (Kerala High Court)
In a significant ruling, the Kerala High Court has directed the Customs Authorities to process the refund claim of 4% Special Additional Duty (SAD) filed by Elite Green Pvt Ltd. This decision comes in light of the annulment of Circular No.18/2013-Cus by the Delhi High Court, which had imposed additional restrictions on the refund of SAD. The judgment emphasizes the recognition of DEPB scrips as valid payment for SAD and underscores the importance of adhering to the original conditions stipulated in Notification No.102/2007-Cus.
Background of the Case
Elite Green Pvt Ltd, a leading food processing unit in India, engaged in the export of processed food, imports raw materials to meet its export obligations. The company utilized DEPB scrips, obtained as export incentives, to pay the basic customs duty and 4% SAD on imported goods. According to Notification No.102/2007-Cus, importers are entitled to a refund of the SAD paid upon providing proof of value-added tax (VAT) payment.
However, Circular No.18/2013-Cus, issued on April 29, 2013, altered the procedure for claiming SAD refunds. The circular mandated that the 4% SAD refund would only be available if the initial payment was made in cash, not through DEPB scrips. This led to the Customs Authorities rejecting the refund claim of Elite Green Pvt Ltd, prompting the company to file a writ petition.
Single Judge’s Decision
The learned Single Judge dismissed the writ petition, stating that the appellant’s ignorance of the new circular could not be accepted. The judge further reasoned that despite the initial payment being accepted by the Customs Authorities, the claim for refund could not be processed under the new circular’s terms.
Appeal and Arguments
Elite Green Pvt Ltd appealed against the Single Judge’s decision. The appellant’s counsel, Sri. Baby M.A, argued that the 4% SAD was indeed paid at the time of import, as recognized by the Customs Authorities, albeit through DEPB scrips. The counsel contended that the conditions for refund as per Notification No.102/2007-Cus were satisfied, and the additional restrictions imposed by Circular No.18/2013-Cus were unjustified, especially since the Delhi High Court had already annulled the circular in Allen Diesels India Pvt. Ltd v. Union of India.
Kerala High Court’s Judgment
The Kerala High Court found merit in the appellant’s arguments. The court noted that the payment of 4% SAD through DEPB scrips was accepted by the Customs Authorities at the time of import, fulfilling the appellant’s liability under the Customs Act and Rules. Given this, the court held that the respondents could not deny the refund merely because the payment method involved DEPB scrips.
