2014 (4) TMI 1160 - HC - Customs

Refund claim - time bar - Did the Tribunal fall into error in rejecting the appellant s claim for refund of ₹ 5,76,180/- on the ground that in terms of Notification No. 102/2007, the application is time barred? Held that - the period of limitation of one year was to be calculated based upon the date of payment of the S.A.D. and not based upon the date of further sale or payment of VAT, was held to be erroneous. At least as far as the undisputed amounts with respect to the 5 bills of entry are concerned, requires to be allowed. So far as the 6th bill of entry is concerned, appellant asserts that the C.B.E. & C. Circular No. 16/2008 paragraph (viii) covers the aspect and that payments made by clearing or forwarding agents to satisfy VAT demands would also fall in the legitimate claim that can be pressed by importers - the refund application of the appellant with respect to bill of entry dated 5-11-2007 for the sum of ₹ 82,123/- is hereby remitted to the Assistant Commissioner of Customs (Refund), ICD, Tughlakabad, New Delhi, for verification and appropriate orders. Appeal partly allowed.

Summary

Issues:
1. Claim for refund of special additional duty (S.A.D.) on imported goods.
2. Interpretation of Notification No. 102/2007 regarding time limitation for refund claims.
3. Legitimacy of refund claim when VAT was paid by a third party.
4. Applicability of C.B.E. & C. Circular No. 16/2008 on VAT payments by clearing agents.

Analysis:

1. The appellant sought a refund of special additional duty (S.A.D.) amounting to &8377; 5,76,180 paid on imported consignments of aluminium and scrap tablets through six bills of entry. Lower authorities deemed the claim time-barred under Notification No. 102/2007. The Tribunal upheld the rejection, citing the non-retrospective effect of the notification.

2. The High Court, referencing a previous judgment, clarified that the period of limitation for S.A.D. refund claims is not tied to the Customs Act's limitation period. It emphasized that S.A.D. refund conditions trigger immediate compensation upon fulfillment, unlike regular customs duty incidents. The Revenue's interpretation, leading to Circulars and Notifications in 2008, was deemed erroneous. Consequently, the appeal was allowed for the undisputed amounts related to five bills of entry.

3. Regarding the sixth bill of entry, the appellant argued that C.B.E. & C. Circular No. 16/2008 validates VAT payments by clearing agents as part of legitimate refund claims. The High Court remitted the refund application for the &8377; 82,123 sum on the bill of entry dated 5-11-2007 for further verification and orders to the Assistant Commissioner of Customs.

4. The High Court partially allowed the appeal, granting relief for the five bills of entry while remitting the sixth bill for verification. The judgment underscored the incorrectness of the Revenue's stance on the limitation period for S.A.D. refund claims and upheld the appellant's entitlement to refund under the prevailing legal interpretation.