Customs Circular
No.24/2007-Cus dated 02.7.2007
Subject: Delay in payment of customs duty refunds – reg.
I am directed to state that various representations
from importers, exporters, trade and industry associations have been received in
the Board regarding delay in payment of Customs duty refunds and the hardships
faced in obtaining refunds from Customs field formations. Further, in a number
of cases it has also come to the notice that the Courts and higher judicial
authorities have taken adverse note of the delay caused in refund of duty.
2. Refund of customs duty involves acknowledgement and processing of
refund application for sanction or rejection of refund in terms of section 27 of
the Customs Act, 1962 and the Customs Refund Application (Form) Regulations,
1985. Further, Board have also issued instructions from time to time clarifying
the doubts raised by field formations in dealing with the refund claims.
(Board’s circular No. 59/95-Cus dated 5.6.1995). Needless to say that if these
procedures are followed properly, normally refund applications should be
disposed off within the interest free time limit of three months.
3. However, it is noticed that the aspect of timely refund of Customs
duty has not been given due importance by the field formations. Therefore,
Board desires that in order to ensure expeditious disposal of Customs duty
refund applications and to enhance transparency in refund disbursement as well
as bring alertness among the officers, the following procedure should be
followed:
4.1. System for receipt and acknowledgement of all Customs duty refund
applications: All refund applications made by any person under section 27 of
the Customs Act, whether by post or courier or personal delivery, shall be
received by the department and a simple receipt, for having received the
application that is said to have been filed as ‘refund application’ shall be
issued immediately. At this stage the receipt should make it clear that the
application has not been scrutinized for its completeness. These applications
are required to be scrutinized for their completeness within ten working days of
their receipt, for giving acknowledgement by the proper officer as per the
Customs Refund Application (Form) Regulations, 1995. Hence, if any deficiency is
found in the application or any document is required by the department, the same
shall be informed at this stage of initial scrutiny itself within ten working
days of the initial receipt. This will avoid any chance for raising repeated
queries to the applicant, in a piece-meal manner and bring certainty in dealing
with refund applications.
4.2. Processing of refund applications and their disposal: Application of
refund found to be complete in all respects by Customs, after scrutiny as above,
shall be processed on ‘first-come-first served’ basis so as to decide whether
the whole or any part of the duty and interest paid by the applicant is
refundable. If refund is due in such case, an order for refund is required to be
passed in terms of sub-section (2) to section 27 or where the claim for refund
is found liable to be rejected, as the case may be, a speaking order shall be
passed giving complete reasons for the order. Further, in respect of the
provisions of unjust enrichment, the order should indicate that this aspect has
been examined based on the guidelines, if any, applicable; the order should also
contain the findings of adjudicating authority on the documents produced in
support of the claim and the basis for determining the amount as either
refundable to the claimant or payable to the Consumer Welfare Fund or the claim
not being admissible.
4.3. Issue of Cheque: Where the refund application has been admitted,
whether in part or in full, and claimant is eligible for refund, the Deputy /
Assistant Commissioner of Customs may ensure that payment is made to the party
within 3 days of the order passed after due audit, if any. In all such cases
refund of amount shall be paid to the applicant by a cheque on the authorised
bank with which the sanctioning authority maintains account. After the cheque
has been signed, it shall either be delivered to the claimant or his authorised
representative personally when he next calls for it or sent to him by Registered
Post ‘Acknowledgement Due’ at Government cost, on the basis of pre-receipt
already obtained from the claimant.
4.4. Audit system: Existing instructions on audit scrutiny of refunds shall
continue. Accordingly, all applications involving a refund of duty and/or
interest of Rs. 5 lakhs or more shall be subjected to pre-audit as per the
existing practice. The applications of refund of amount below Rs.50,000/- may be
post-audited on the basis of the random selection by Deputy/Assistant
Commissioner (Audit). The selection can be made in such a way that 25 per cent
of the refund applications are post-audited. The applications of refund for
amount between Rs.50,000/- and Rs. 5 lakhs should be compulsorily post audited.
This audit system has been prescribed with a view to check improper sanction and
payment of refunds. However, this does not dispense with the verification of the
refund vouchers and the re-conciliation of refunds, which shall continue to be
done by the Chief Account Officers. However, it may be ensured that where
pre-audit is involved the action is completed at the earliest so that the
disposal of refund applications is not unduly delayed.
5. CVC’s instructions: Your attention is also invited to the
instructions issued by the Central Vigilance Commission (CVC) under section
8(1)(h) of the CVC Act, 2003 to bring about greater transparency and
accountability in the discharge of regulatory, enforcement and other public
dealings of the Government organisations vide their Circular No.40/11/06 dated
22.11.2006. (Refer CVC website http://www.cvc.nic.in/ under ‘Improving Vigilance
administration by leveraging technology). These instructions, interalia, require
that status of individual applications / matters should be made available on the
organisation’s website and should be updated from time to time so that the
applicants remain duly informed about the status of their applications. It is
further stated that the manual records maintained presently for various purposes
may continue.
6.1. System of maintaining online database on Customs duty refunds: In
pursuance of the instructions of CVC, all Commissioners of Customs shall
establish a mechanism for maintenance of a comprehensive database in their
respective website, indicating the receipt, acknowledgement, action taken for
disposal (either payment or rejection) of refund applications and those pending
at the end of the month. This shall be implemented with in a period of three
months time and a report of the same may be sent to the Board and DG
(Inspection).
The details of refund application such as name of the claimant, file number,
date of application, amount of refund claimed, date of its acknowledgement shall
be indicated in chronological order by the date of its receipt. The
applications may be serially numbered for each year and shall be shown in a
single list indicating their respective status distinctly. The illustrative
status that could be mentioned for easy understanding of any applicant may
include the following: (i) refund application received but pending for scrutiny
and acknowledgement (ii)(a) refund application acknowledged for its completeness
(ii)(b) refund application found incomplete and returned for rectification of
deficiency (iii)(a) refund application rejected by passing a speaking order (iii)(b)
refund application sanctioned, pending verification by audit (iv) cheques issued
for refunds sanctioned and paid to applicant/ credited to consumer welfare fund.
This is not exhaustive and if any other stage of processing of refund
application is involved the same may be indicated. An abstract at the end of the
month about the total number of refund applications received, acknowledged,
disposed and pending may also be indicated.
This online data base would enable any person who had applied for refund with
Customs, to check the status of his refund application by reference to the date
of his refund application having been received by Customs. This data will be
accessible to the trade and public as well as by all Customs officers to enhance
transparency. Further, the status of individual applications for refund of
customs duty shall be updated from time to time, at least daily, so that the
applicants remain duly informed about the status of their applications. The data
may be allowed for display in the website for three months period from the date
of its final disposal and there after it can be moved to the history data base.
7.1. Monitoring Mechanism: Chief Commissioners/ Directorate General of
Inspection (DGI) is requested to review the position of refunds in their
respective zones/select zones, to check on the timely sanction of refund
applications. If any refund application is pending for long period, the reasons
for the same may be identified by the concerned Chief Commissioner and action
initiated for their disposal by reference to the concerned Commissionerate. DGI
may also access the data base of such refund applications and maintain the data
in respect of those refund applications pending for long period and action taken
thereon, for reporting to the Board.
8. The above instructions are being issued so that an administrative
arrangement is made on a permanent basis to deal with refund of customs duty, an
important aspect of tax administration which needs to be given due importance in
view of the prompt disposal as per legal provisions and their revenue
implications. Accordingly, the Commissioners of Customs and Chief Commissioners
of Customs concerned may ensure for proper implementation of these instructions
of the Board.
9. A suitable Public Notice and Standing Order may be issued for the
guidance of the trade and staff. Difficulties faced, if any, in implementation
of the Circular may be brought to the notice of the Board at an early date.
Yours faithfully,
(Aseem Kumar)
Under Secretary (Customs)
F. No. 401/229/2006-Cus.III
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
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