Customs Act (IV of 1969)---

----S. 33---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S. 2(3)---Refund to be claimed within six months---Claim of refund---Non-processing of such refund over a period of six years---Validity---In spite of objection of Department that the claims were filed with photocopies, they were barred-by time, and that notices issued were not replied by the complainant, there was no justification to keep the claims pending for over six years---Valuation was examined by the Working Committee and was based on its decision- Refund claims in respect of 3 bills of entries were filed within less than one month of the issue of final Clean Report of Finding and less than two months in the fourth import, the period should be courted from the final Clean Report of Finding dates---Complainant was not a registered person and any refund or any adjustment from the sales tax returns could not be made---Federal Tax Ombudsman recommended that Central Board of Revenue to direct the Collector to decide the refund claims within thirty days.

M. Mubeen Ahsan, Advisor.

Muhammad Yousuf, Proprietor.

Ashhad Jawwad, Deputy Collector of Customs, (Appraisement).

FINDING/DECISION

The complaint has been filed against the Customs Department for not deciding three claims filed in February, 1997 and one in July, 1997 for refund of excess duty and taxes. Mr. Mohammad Yousuf, Proprietor of Messrs Unique International, has stated that 4 consignments of chemical were imported in February, March and December, 1996. The invoice value of Sodium Hydrosulphite was $ 15960, and that of Sodium Fromaldehyde Sulfoxinate was $ 17500 for each of the 3 consignments. SGS issued CRF for higher values. The consignments were removed to bonded warehouse and the matter was referred to the Working Committee (for valuation disputes). As the decision of the Committee took a long time and bonding period was to shortly expire, he decided to clear the consignments and fight out the valuation aspect with the SGS later on.

2. The complainant stated that he strongly represented the case with SGS and the Working Committee and the Final CRF issued by SGS too were on the higher side. But, in order to avoid further confrontation, he decided to accept the revised CRF and applied for refund. The refund applications of 3 identical consignments were filed on 4-2-1997 and of one consignment on 24-9-1997. He stated that he contacted Customs Authorities a number of tunes but without result and (now) he was sick and tired. The refund claims have been pending without any reason and the Customs Authorities have not refunded the excess duty and taxes for the last more than 6 years. He requested that Customs Authorities be directed to refund the amount and also pay mark up @ 2 % per annum for the period the claims have remained pending.

3. The Deputy Collector of Customs replied to the complaint that 3 cases of February and March, 1997 have been retrieved from old record. The scrutiny of these 3 cases has revealed that the refund claims 'were filed on 4-2-1997 and were barred by time under section 33 of the Customs Act. These claims were filed against photocopies of the documents and the importer was advised vide letters, dated 4-12-2001 to provide original documents and appear for hearing but no one appeared and no reply was received. In respect of the 4th claim, he stated that this claim too was barred by the time under section 33 of the Customs Act. He requested that the complaint be dismissed being barred by time.

4. Mr. Mohammad Yousuf appeared for hearing and stated that the notices claimed to have issued on 4-12-2001 were never received by him because had he received the notices he would have immediately responded. However, the copies of the notices and the documents mentioned therein have no relationship with his refund claims. He contested the claim of the customs authorities that the refund was barred by time because, according to him, the crucial date in respect of his claims was the date on which the Final CRF was issued. He stated that he was recently summoned by the Deputy Collector of Customs who asked him to file the original documents and promised that the refund claims would be processed. The documents were delivered in his office on 15-8-2003 and the Deputy Collector has sent a letter to the Additional Collector of Sales Tax for verification that no adjustment of input or refund of the sales tax had been claimed and obtained by him. It seemed that the customs have now agreed to decide the refund claims.

5. Mr. Yousuf further stated that his unit was registered with the sales tax authorities in December 1998 as evident from the certificate issued by the Assistant Collector of Sales Tax. Therefore, the question of any input adjustment or refund prior to the registration should not arise. With regard to the process of determination of value he stated that the valuation aspect was under consideration of the working committee and hearing notices were issued in January and May 1997. On the basis of working committee's decision the Final CRF were issued in 3 cases in January 1997 and in one case in June 1997. The refund claims were filed immediately thereafter. He reaffirmed that the crucial date was the date of the Final CRF and not the date of payment of duty and taxes, which was done to have the consignments from demurrage.

6. The Deputy Collector of Customs replied that the Complainant has already filed original documents for refund and the matter was under process. With regard to the time-bar he stated that the period would be counted from the date of the decision of the working committee and if the claims had been filed within 6 months thereof, there would be no delay in filing.

7. It is established that the 03 refund claims filed on 4-2-1997 and one on 24-1-1997 have not been processed and disposed of by the Department. In spite of the objection of the Department that the claims were filed with photo copies, they were barred by time, and that notices issued on 4-12-2001 were not replied by the complainant, there was no justification to keep the claims pending for over six years. This is a clear-case of maladministration on the part of the customs. There is considerable force in the argument of the complainant that the valuation of goods was being examined by the working committee and, based on its decision, SGS issued CRF on 22-1-1997 and 9-6-1997. Therefore, the refund claims in respect of 3 bills of entries were filed within less than one month of the issue of Final CRF and less then two months in the 4th import; the period should be counted from the Final CRF date. The Deputy Collector agreed that this aspect would be kept in view. The sale tax registration document provided by the complainant should also be kept in view because in 1996/ 1997 the complainant was not a registered person and, therefore, any refund or any adjustment from the sales tax returns could not be made by him.

8. It is recommended that C.B.R. direct the Collector to

(i)decide the refund claims within thirty day; and

(ii)compliance reported within forty-five days.

C.M.A./1020/FTO Order accordingly.