Case Note & Summary
The petitioners, a company importing and supplying ATMs to State Bank of India, filed a writ petition under Article 226 of the Constitution challenging condition (c) of Notification No.102/2007-Cus as amended by Notification No.93/2008-Cus. The notification exempted goods imported for subsequent sale from the whole of Special Additional Duty (SAD) leviable under Section 3(5) of the Customs Tariff Act, 1975, subject to fulfillment of conditions, including filing of a refund claim within one year from the date of payment of SAD. The petitioners imported ATMs between September 2013 and January 2014, paying all duties including SAD. Due to the nature of their contract with State Bank of India, the actual sale and installation of the machines took place over an extended period, with sale occurring after the expiry of one year from payment of SAD. When the petitioners subsequently filed a refund claim for Rs. 1,43,76,435/-, the respondent customs authorities refused to entertain it as being beyond the one-year limitation period prescribed in condition (c). The petitioners contended that the one-year condition is arbitrary and unreasonable because the exemption itself is contingent on subsequent sale, an event over which the importer has no control and which may take longer than one year. They argued that the limitation period should logically run from the date of sale, not from the date of duty payment, and that the condition defeats the very purpose of the exemption. Reliance was placed on decisions of the Delhi High Court in Sony India Pvt. Ltd v. Commissioner of Customs and Pee Gee International v. Commr. of Cus. (ICD), which held similar stipulations to be ultra vires Article 14. The respondents' arguments were not detailed in the extracted text. The Bombay High Court, after hearing detailed arguments, granted rule and made it returnable forthwith with consent of parties. The final judgment and operative directions are not available in the provided extract.
Issue of Consideration
Whether condition (c) of Notification No.102/2007-Cus as amended, fixing a one-year time limit from payment of SAD for filing refund claims, is ultra vires Article 14 on grounds of unreasonableness, given that the exemption is conditional on subsequent sale which may occur beyond one year.
Case Details
2016 LawText (BOM) (12) 13
WRIT PETITION NO.388 OF 2016
S.C. Dharmadhikari, B.P. Colabawalla
M.H. Patil, Sachin Chitnis, Aparna Hirandagi for Petitioners; Pradeep S. Jetly for Respondents
M/s. CMS Info Systems Limited
The Union of India, The Central Board of Excise & Customs, The Commissioner of Customs JNPT, The Assistant Commissioner of Customs (Refund)
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Nature of Litigation
Writ petition under Article 226 challenging validity of condition (c) in Notification No.102/2007-Cus as amended, imposing a one-year limitation for filing refund claims of Special Additional Duty from date of payment, and seeking a direction to consider refund claim without that condition.
Remedy Sought
Petitioners sought quashing of the time limit stipulation and a writ of mandamus directing respondents to consider their refund claim independent of the condition.
Filing Reason
Petitioners imported ATMs, paid SAD, later sold them and paid sales tax, then filed refund claim beyond one year from payment; respondents refused to accept the claim as time-barred under the notification.
Issues
Whether condition (c) of Notification No.102/2007-Cus fixing one-year limit for filing refund claim from date of payment of SAD is arbitrary, unreasonable, and violative of Article 14 of the Constitution when exemption is conditional upon subsequent sale which may occur later.
Submissions/Arguments
The one-year period from date of payment of SAD presupposes sale within that time, which is beyond importer's control due to market conditions and installation requirements; the limitation should run from date of sale as that is the event triggering entitlement to refund.
Condition (c) is unreasonable and defeats the purpose of exemption; the Delhi High Court in Sony India and Pee Gee International declared similar stipulation ultra vires Article 14, and that interpretation should be followed.
Judgment Excerpts
The stipulation with regard to time is questioned by urging that the period of one year stipulated from the date of import presupposes that the goods can be sold within this period.
Therefore, the period of limitation should never and can never be intended to commence from the date of payment of Special Additional Duty of Customs but it must commence from the date of sale of the goods. That would be a reasonable and proper stipulation. However, condition 2(c) freezes the entitlement of refund and no refund application can be filed after the period of one year from the date of payment of the SAD.
Procedural History
Petition filed on 15-12-2015 in Bombay High Court; on 19-12-2016, court granted rule, respondents waived service, rule made returnable forthwith by consent.
Acts & Sections
- Customs Act, 1962: Section 25(1)
- Customs Tariff Act, 1975: Section 3(5)
- Constitution of India: Article 14, Article 226
