Circular No 621/12/2002 – CX
21st February, 2002
F.NO. 156/19/2001 – CX 4
Government if India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
Sub: Refund of Central Excise duty to diplomatic missions
I am directed to say that doubts have been raised by the field formations regarding the procedure to be followed for refunding central excise duty element in respect of purchases made by foreign diplomatic missions and consular offices located in India.
2. Board’s instructions on this are, F.No.45/7/56-CX(M).II dt.24.7.1957 read with Circular No.1/MOTOR VEHICLES/70 dt.19.2.1970. One of the conditions mentioned in these circulars is that the refund claims from diplomatic missions should be entertained by the Central Excise officers only if they are filed within 3 months from the date of purchase of the motor vehicle. Claims filed beyond three months were not to be admitted without reference to the Ministry of Finance. After the recent amendment to Sec.11B of the Central Excise Act, 1944, in May 2000, the time limit for filing refund claims has been raised from six months to one year from the relevant date. It has been pointed out that this discrepancy between the time limit prescribed in the statute (1 year) and the time limit (3 months) mentioned in Board’s instructions of 1957 and 1970, is creating confusion in the field.
3. In the past, refunds on purchases by diplomatic missions were being granted, either as an ex-gratia payment, or on the basis of ad-hoc exemption orders. Being ex-gratia payment, the time limit for claiming refund was prescribed through the above executive instructions and in a number of cases relaxations were also granted. Subsequently, from 1998, Ministry declined to relax the time limit beyond that statutorily prescribed (then six months).
4. ubsequently, when the provisions of section 5A(2) relating to ad-hoc exemptions were amended in 1999 to limit its coverage to goods for charitable purpose or of strategic or secret nature only, ad-hoc exemptions to diplomatic missions could no longer be given under section 5A(2). It was then decided to issue a general exemption notification to cover such cases. This was done for the first time by notfn No 44/99-CE dt 29.12.99.
5. The relevant notification which presently allows exemption to goods supplied to diplomatic missions is notification No.3/2001-CE dt.1.3.2001 (Sl.No.250). This notification grants full exemption to all goods (and not merely motor vehicles) supplied for the official use of foreign diplomatic or consular missions in India. The exemption is subject to condition (45) of the notifn. which, inter-alia, requires production of a certificate from the Protocol Division of the Ministry of External Affairs and an undertaking from the diplomatic mission that they will produce, within a period of 3 months or such extended period, a certificate that the goods have been put to the specified use. There is also a condition that the said goods cannot be disposed of before the expiry of 3 years from the date of clearance of the goods.
6. It may be noted that earlier, exemption was available (through executive instructions and ad-hoc exemption orders) to goods (including cars) meant both for official as well as personal use of the mission or its staff. The general exemption notification limits this benefit only to goods meant for the official use of the mission/consular office.
7. There seems to be no justification, now, for continuing the old Circulars of 1957 and 1970. Refunds to diplomatic missions would be guided by the normal rules/provisions relating to refunds. In view thereof the Circulars of 1957 and of 1970 are hereby withdrawn.
8. Refunds would therefore be governed entirely by the conditions mentioned in notifn. No.3/2001 CE dt 1.3.2001(sl.No.250) and the time limit for making the refund claim would be one year from the date of purchase of the goods by the diplomatic mission or consular office, as per the provisions of section 11B(1) of the Central Excise Act, 1944, read with Explanation (B)(e). No extension beyond 1 year from the date of purchase, would be permissible as this time limit is statutorily prescribed. Cases need not, therefore, be referred to the Ministry for relaxation or extension of this time limit.
9. Refunds would be entertained by the Commissionerate within whose territorial jurisdiction the mission/consular office is located as per Board’s instructions F.No.156/14/2000 – CX 4 dated 11th April, 2001.
10. The missions are, obviously, free to clear the excisable goods straight from the factories, without payment of duty, after satisfying the conditions of the above exemption notification. In that case there would be no case for claiming any refund.
11. It may be pointed out that petrol is also one of the items on which refunds are sanctioned to diplomatic missions. Petrol refunds are governed by a separate set of instructions and, therefore, the procedure indicated in para 8 above will not apply to motor spirit/petrol refunds which would continue to be governed by existing instructions on the same.
12. The Protocol Division of the MEA is also being separately informed for circulating these instructions to all the diplomatic/consular missions in India.
13. Hindi version will follow.
14. Receipt of these instructions may be acknowledged.