Kerala High Court: DGFT Circular Providing 4% of SAD Refund Published on Official Website is Equivalent to Public Notice

Kerala High Court: DGFT Circular Providing 4% of SAD Refund Published on Official Website is Equivalent to Public Notice

The Kerala High Court has observed that a circular issued by the Directorate General of Foreign Trade (DGFT) providing 4% of the Special Additional Duty (SAD) refund published on the official website is equivalent to public notice.

The single judge of Justice Dinesh Kumar Singh noted that when the Circular itself provides that if any exporter claims a refund of 4% SAD, the amount should have been paid in cash. The petitioner did not pay the amount in cash but in scrips. Therefore, under the provisions of the Circular, he was not entitled to the refund of 4% SAD on the Bills of Entries for the year 2014–2015.

In the present case, the petitioner/assessee claimed to be a leading food processing unit in India that exports processed food. The petitioner procures raw materials locally to process the food items for export. Some raw materials were also imported to meet export obligations.

The DGFT, by which 4% duty was collected as an additional duty while importing goods, and the amount collected from the importers were to be returned to the importer subject to the production of evidence regarding payment of sales tax to customs authorities.

The DGFT of the Government of India has come out with another Circular No. 18/2013-Cus dated April 29, 2013 regarding the refund of 4% SAD. The notification provides that for a refund of 4% of SAD, the importer should make an initial payment of 4% of SAD in cash instead of scrips. A decision was also taken that no recrediting should be done if such a payment was made using scrips.

In other words, in the future, exporters should pay the SAD component in cash if they would like a refund of 4% of SAD.

The petitioner submitted that despite issuing the notification, the petitioner paid the 4% SAD in scrips as the petitioner was unaware of the notification. A public notice should have been given regarding the notification (Circular No. 18/2013-Cus) dated April 29, 2013 by the Cochin Port.

As per the mandate of the said Circular, public notice and a standing order were required to be issued for the guidelines of the trade and the staff, which was not done, and that resulted in the petitioner not paying the SAD in cash but in scrips, which was accepted by the Customs Authorities.

The department contended that the circular was published on the official website of the DGFT. Once a Circular or notification is published on the website of the Department or the DGFT, it is sufficient public notice. The petitioner cannot argue that there was no public notice. The petitioner cannot say that there was no public notice of the Circular once it was published on the official website of the DGFT.

The Court found substance in the submissions of the learned Counsel for the respondents. The Court held that the petitioner has not paid the 4% SAD in cash but in scrips despite Circular No. 18/2013-Cus. Dated 29 April 2013, and is not entitled to e refund of 4% of SAD.