Circular
No.24/2007-Cus
F.
No. 401/229/2006-Cus.III
Government
of India
Ministry
of Finance
Department
of Revenue
Central
Board of Excise and Customs
North
Block, New Delhi.
02 July , 2007.
To
All
Chief Commissioners of Customs.
All
Chief Commissioners of Central Excise.
Principal
Chief Controller of Accounts, CBEC.
Chief
Departmental Representative, CESTAT.
All
Commissioners of Central Excise.
All
Commissioners of Customs.
Webmaster@icegate.gov.in.
Sir,
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)
Copy
to:
1.
PS to Chairman (E&C),
2.
All Members, CBEC
3.
Principal CCA, CBEC – with the request to instruct PAOs to ensure timely
issuance of Cheque (for the refund amount) after the refund order is passed by
the Proper Officer (Para 4.3 refers).
4.
Additional Director General, Directorate of Data Management - Board desires that
on the basis of the monthly abstracts or data available on website of the
Commissionerates a comprehensive report shall be prepared and their review shall
be put up to Member (Customs) by the ADG, Data Management for periodical
monitoring.
5.Director
General, Directorate General of Inspection – Based on the request by ADG,
Directorate of Data Management, necessary inspection may be conducted of the
refund section in select Customs Houses where the pendencies are high and the
disposal action has not resulted in the desired action for specific action.
6.
All Directorates, CBEC
7.
All Joint Secretaries/ Commissioners, CBEC
8.
All Directors/Deputy Secretaries, CBEC
9.
All Under Secretaries/STOs/TOs, CBEC
10.
Guard file.
(Aseem
Kumar)
Under Secretary (Customs)
