CBEC cannot modify Customs Act benefits via circulars; Refunds granted, circulars invalidated.

The court held that the Central Board of Excise and Customs (CBEC) cannot modify benefits granted under a Customs Act notification through circulars. Circulars imposing additional conditions not present in the original notification were deemed invalid. Refund applications rejected based on such circulars were set aside, directing the Department to grant refunds within four weeks. The court emphasized that statutory notifications, not administrative circulars, govern exemptions. The Petitioner was entitled to the refund of Special Additional Duty paid using Duty Entitlement Passbook (DEPB) scrips. The writ petitions were allowed, with no costs awarded.

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Issues Involved:
1. Whether the benefit granted under a notification issued in terms of Section 25(1) of the Customs Act, 1962 can be modified or amended by a circular issued by the Central Board of Excise and Customs (CBEC).
2. The validity of Circular Nos. 6/2008, 10/2012, and 18/2013 issued by the CBEC in relation to the refund of Special Additional Duty (SAD) paid using DEPB scrips.
3. The rejection of the Petitioner's refund applications based on the aforementioned circulars.

Issue-wise Detailed Analysis:

1. Modification of Notification by Circular:
The primary issue is whether the CBEC can modify or amend the benefit granted under a notification issued under Section 25(1) of the Customs Act, 1962 through a circular. The court noted that Section 151A of the Act allows the CBEC to issue instructions for uniformity in classification of goods or levy of duty but does not permit amendments to exemption notifications. Such amendments can only be made by issuing another notification under Section 25(1). The court referenced the case of Sandur Micro Circuits Ltd. v. Commissioner of Central Excise, which held that a circular cannot take away the effect of statutorily issued notifications or impose new conditions that restrict the scope of the exemption.

2. Validity of CBEC Circulars:
The court examined the validity of Circular Nos. 6/2008, 10/2012, and 18/2013, which imposed an additional condition that refunds of SAD paid using DEPB scrips would not be granted in cash. It was observed that these circulars effectively amended Notification No. 102/2007-Customs by introducing a condition not present in the original notification. The court cited previous decisions, including Modi Rubber Ltd. v. Union of India and Pioneer India Electronics (P) Ltd. v. Union of India, which established that administrative circulars cannot impose conditions that are not part of the statutory notification. Therefore, the court declared these circulars ultra vires and invalid as they sought to deny refunds contrary to the terms of the original notification.

3. Rejection of Refund Applications:
The court addressed the rejection of the Petitioner's refund applications, which were denied based on the aforementioned circulars. The Petitioner had fulfilled all the conditions of Notification No. 102/2007-Customs, and the rejection was solely due to the use of DEPB scrips for paying SAD. The court held that the rejection orders dated 16th May 2014 and 20th May 2014 were bad in law since they relied on invalid circulars. Consequently, the court set aside these orders and directed the Department to grant the refunds as per the Petitioner's applications within four weeks. The court also directed the consideration of the Petitioner's entitlement to interest on the refund amount within the same period.

Conclusion:
The writ petitions were allowed, and the applications disposed of with no orders as to costs. The court's judgment emphasized that any amendment to an exemption notification must be made through a proper notification under Section 25(1) of the Customs Act, and not through administrative circulars. The invalidation of the CBEC circulars reaffirmed the statutory requirements for granting refunds and upheld the Petitioner's entitlement to the refund of SAD paid using DEPB scrips.

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