2018 (2) TMI 1574 - AT - Customs

Refund of SAD - N/N. 102/2007 Cus dated 14.09.2007 - denial on the ground that no amount was realized or received by the appellant company against 4% SAD paid by them as per the bills of entry - Held that - the issue herein is squarely covered by the ruling of the Hon ble Madras High Court in the case of CCE v. Flow Tech Power 2006 (1) TMI 37 - HIGH COURT OF JUDICATURE (MADRAS) , where it was held that duty had been absorbed by the assessee which was submitted that the Chartered Accountant s Certificate and the profit and loss account also confirmed that the duty paid on the impugned goods had been absorbed by the assessee and had been shown as expenditure in profit and loss account and had not been passed on to the customer. Accordingly, it was concluded by the Hon ble High Court that there was no error in the order of this Tribunal, directing to grant relief of SAD - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Refund claim of Special Additional Duty (SAD) disallowed by Commissioner (Appeals).

Analysis:
The appellant imported goods and claimed a refund of SAD under Notification No. 102/2007 Cus dated 14.09.2007. They filed two separate refund applications for 4% SAD. The appellant submitted various documents, including a certificate from a Chartered Accountant stating that the additional duty was not passed on to customers. The appellant accounted for SAD in their books as additional customs duty and charged it to the expenses account, not to the profits. The Asst. Commissioner noted that no amount was realized against the SAD paid, and the appellant submitted an audited balance sheet showing the Additional Custom Duty under Schedule 10. Despite the appellant's submissions, the Asst. Commissioner rejected the refund claim of ?24,64,417.

The appellant appealed to the Commissioner (Appeals) who upheld the rejection, stating that the burden of duty was passed on to customers as per the balance sheet. The appellant argued that charging SAD to profits does not lead to unjust enrichment as there was no cash flow from buyers. The appellant cited a ruling by the Hon'ble Madras High Court in a similar case, where it was held that the duty paid had been absorbed by the assessee and not passed on to customers. The Tribunal found the issue covered by the Madras High Court ruling and allowed the appeal, directing the disbursement of the SAD amount within 45 days with interest.

In conclusion, the Tribunal overturned the decision of the Commissioner (Appeals) and directed the refund of SAD based on the precedent set by the Hon'ble Madras High Court. The appellant's argument that charging SAD to profits did not result in unjust enrichment was accepted, leading to the allowance of the appeal and the order for disbursement of the refund amount within a specified timeframe along with interest.