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2017 (11) TMI 1300 - HC - CustomsRefund of SAD - N/N. 102/2007-CUS dated 14th September, 2007 - whether limitation period specified under Section 27 of the Act would apply to claims for refund made under the notification of 2007? - Held that - the issue is covered by the decision of the Delhi High Court in the case of Sony India Private Limited versus Commissioner of Customs 2014 (4) TMI 870 - DELHI HIGH COURT , where it was held that With the introduction of the circular and then amended notification (No. 93), the Customs authorities started insisting that such limitation period which was prescribed w.e.f. 01.08.2008 by notification became applicable. There is a body of law that essential legislative policy aspects period of limitation being one such aspect cannot be formulated or prescribed by subordinate legislation. Circular dated 28th April, 2008 specifically states the view and understanding of the Revenue that Section 27 of the Act is not made applicable to the N/N. 102/2007 and the time limit prescribed under the said Section would not be applicable. The Revenue notwithstanding the said understanding and their Circular, now seeks to contend and urge to the contrary. Appeal dismissed - decided against appellant.
Issues Involved:
1. Refund of Special Additional Duty (SAD) under Notification No. 102/2007-CUS. 2. Applicability of the limitation period under Section 27 of the Customs Act, 1962. 3. Interpretation of subordinate legislation imposing a limitation period for refund claims. Issue-wise Detailed Analysis: 1. Refund of Special Additional Duty (SAD) under Notification No. 102/2007-CUS: The Commissioner of Customs (Import) challenged the final order dated 2nd January 2017 by the Custom, Excise, and Service Tax Appellate Tribunal (CESTAT), which allowed the appeal by the respondent and directed a refund of ?13,72,436/- under Notification No. 102/2007-CUS dated 14th September 2007. The court noted that the issue was covered by the Delhi High Court's decision in Sony India Private Limited versus Commissioner of Customs, which established that SAD is refundable once the importer shows that the goods have been sold or VAT has been paid. 2. Applicability of the limitation period under Section 27 of the Customs Act, 1962: The court examined whether the limitation period specified under Section 27 of the Customs Act applied to refund claims under Notification No. 102/2007-CUS. The judgment in Sony India clarified that the phrase "so far as may be" in Section 27 indicates that the mechanism for refunds applies but not the period of limitation. The court emphasized that the Customs authorities had not initially understood Section 27 to impose a one-year limitation period on SAD refunds until the introduction of Circular No. 6/2008 and Notification No. 93/2008, which prescribed a one-year period from the date of payment of duty. 3. Interpretation of subordinate legislation imposing a limitation period for refund claims: The court discussed the validity of imposing a limitation period through subordinate legislation without a statutory amendment. The judgment in Sony India held that essential legislative policy aspects, such as limitation periods, cannot be formulated by subordinate legislation. The court referenced Khemka and Co. (Agencies) Private Ltd. v. State of Maharashtra, which asserts that substantive rights cannot be affected by subordinate legislation. The court also addressed the decision in Principal Commissioner of Customs versus Riso India Private Limited, clarifying that it did not conflict with Sony India. Riso India dealt with whether interest was payable on delayed refunds of SAD, not the applicability of the limitation period. Conclusion: The court concluded that the impugned order was consistent with the ratio in Sony India, affirming that the limitation period under Section 27 does not apply to SAD refunds. The appeal was dismissed, and no substantial question of law arose. The court reiterated that the purpose of SAD is to ensure the collection of appropriate sales tax or VAT and that it is refundable upon proof of such payment. The Revenue's attempt to argue contrary to its own circulars and understanding was rejected.
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