2020 (3) TMI 166 - AT - Customs

Tribunal orders RTGS refund over DEPB scrips for duty payments, upholding Commissioner decision.

The Tribunal upheld the Commissioner (Appeals) decision directing a refund of Rs. 10,95,32,485.41/- through RTGS instead of re-crediting in DEPB scrips. ... Refund of customs duty - re-crediting of DEPB scrips - payment of duty by utilization of DEPB scrips - mode of disbursement of refund (RTGS/cash versus re-credit) - validity/expiry of DEPB scrips and its effect on refund - entitlement to refund irrespective of mode of original payment - invalidity of departmental circulars imposing additional conditions not in notification - precedential effect of Allen Diesels and Tribunal decisions on cash refunds where DEPB was usedRefund of customs duty - re-crediting of DEPB scrips - mode of disbursement of refund (RTGS/cash versus re-credit) - validity/expiry of DEPB scrips and its effect on refund - entitlement to refund irrespective of mode of original payment - precedential effect of Allen Diesels and Tribunal decisions on cash refunds where DEPB was used - Whether the Commissioner (Appeals) was justified in directing disbursement of the sanctioned refund by RTGS/cash instead of re-crediting the amount in DEPB scrips. - HELD THAT: - The DEPB scheme provided a mechanism for exporters to discharge import duty by utilization of scrips issued by DGFT; the notification permitting credit of DEPB scrips for import was time bound and its operative period expired (re-credits could only be exercised up to 30 September 2011). Payment of duty by debiting DEPB scrips constituted a valid mode of payment and does not preclude entitlement to a refund. Where the licensing/re credit mechanism has been discontinued or the licences have expired so that re credit cannot be effectuated, insisting on re credit would in practice deny the sanctioned refund. Reliance upon departmental circulars or procedures cannot introduce an additional condition not contained in the governing notification so as to deny cash refund; this legal position is supported by the Delhi High Court decision in Allen Diesels and by subsequent Tribunal decisions which held that refunds must be paid in cash/RTGS when re credit is not practicable despite original payment through DEPB scrips. Applying these principles, the Commissioner (Appeals) correctly concluded that re crediting in expired/unenforceable scrips would defeat the refund and that the sanctioned amount should be disbursed by RTGS/cash. [Paras 15, 17, 18, 19, 20]The Commissioner (Appeals) was justified in directing disbursement of the sanctioned refund by RTGS/cash instead of re crediting DEPB scrips; the departmental appeal is dismissed.Final Conclusion: The appeal filed by the Department is dismissed. The order of the Commissioner (Appeals) directing disbursement of the sanctioned refund by RTGS/cash (in lieu of re crediting DEPB scrips) is upheld. Issues Involved:1. Legitimacy of the Commissioner (Appeals) order directing refund through RTGS instead of re-credit in DEPB scrips.2. Validity and utilization of DEPB scrips for refund purposes.3. Applicability of relevant legal precedents and notifications.Issue-wise Detailed Analysis:1. Legitimacy of the Commissioner (Appeals) order directing refund through RTGS instead of re-credit in DEPB scrips:The Commissioner of Customs challenged the Commissioner (Appeals) order dated 6 May 2019, which directed the refund of Rs. 10,95,32,485.41/- to be disbursed via RTGS instead of re-crediting it in the respective licences. The Assistant Commissioner (Refund) had earlier sanctioned the refund claim of Rs. 12,06,57,869/- but directed only Rs. 1,11,25,383.83/- to be paid through RTGS, with the remaining amount to be re-credited to DEPB scrips. Artex Textile contended that since DEPB scrips had been withdrawn by the Director General of Foreign Trade, the re-credited scrips could not be utilized. The Commissioner (Appeals) supported this view, citing that the re-crediting process had been discontinued and that not allowing the refund through RTGS would effectively deny the refund.2. Validity and utilization of DEPB scrips for refund purposes:The DEPB scheme was introduced under the Foreign Trade Policy, 2009-2014, to neutralize the incidence of customs duty on import content of export products. The scheme allowed exporters to apply for credit at notified rates of FOB value of exports. The notification dated 11 September 2009 governed the import of goods utilizing DEPB scrips, which was later amended to be valid only until 30 September 2011. A Circular dated 1 July 2011 confirmed that DEPB scrips could only be utilized until 30 September 2011. Thus, re-credits of DEPB scrips could not be utilized beyond this period, making the Department's claim to re-credit the refund amount impractical and effectively denying the refund to Artex Textile.3. Applicability of relevant legal precedents and notifications:The Commissioner (Appeals) relied on the Delhi High Court decision in Allen Diesels India Pvt. Ltd. v/s Union of India, which invalidated certain Circulars that restricted refunds if duties were paid using DEPB scrips. The High Court held that such Circulars could not impose additional conditions not specified in the original notification. Similarly, the Tribunal in MK Agrotech Pvt. Ltd. v/s Commissioner of Customs and Commissioner of Customs v/s SEL Manufacturing Company Ltd. supported the view that refunds should be paid in cash if duties were paid through DEPB scrips, as there was no provision under the Customs Act to re-credit these scrips. These precedents reinforced the Commissioner (Appeals) decision to direct the refund through RTGS.Conclusion:The Tribunal found no infirmity in the Commissioner (Appeals) order directing the refund through RTGS, as the DEPB scrips were no longer valid and re-crediting them would deny the refund to Artex Textile. The Department's appeal was dismissed, affirming the Commissioner (Appeals) decision and aligning with the legal precedents that supported refunds in cash or RTGS when DEPB scrips were used for duty payments.