2015 (2) TMI 418 - AT - Customs

Denial of refund claim of SAD - allegation that appellant had not fulfilled the condition of payment of VAT and hence the said amount is not eligible for refund - Held that - The refund of SAD paid on payment of VAT on subsequent sale is governed by the provisions of Notification No. 102/2007-Cus dated 14/09/2007. The conditions stipulated therein are that the goods sold in the domestic market on payment of Sales Tax/VAT and the documents evidencing payment of SAD and payment of appropriate sales tax should be produced and the claim should be made within a period of one year from the date of payment of SAD. It is not in dispute that any of these conditions have been violated. In other words, the appellant has complied with all the substantive conditions which make him eligible for refund of SAD paid. The argument that at the time of filing of the refund as on 20/11/2009, the appellant had not discharged VAT liability to the extent of ₹ 55,673/-, which could at best be considered as a premature claim, but the facts remains that the appellant had paid this amount on 14/12/2009, that is, within a period of one year. Therefore, rejection of refund claim on a technical ground is not sustainable in law. Accordingly I set aside the impugned order - Decided in favour of assessee.

Summary

Issues:
1. Rejection of refund due to VAT payment made after the filing of the refund application.

Analysis:
The appeal was against the Order-in-Appeal passed by the Commissioner of Customs (Appeals), Mumbai, rejecting a refund of Rs. 55,673 in relation to the sale of goods. The rejection was based on the grounds that VAT payment was made after the filing of the refund application, thus not fulfilling the condition of payment of VAT at the time of filing the claim. The appellant argued that the VAT payment was made within the permissible time limit of 21 days from the close of the month and that the sale had been completed before the refund claim was submitted.

The appellant contended that the Special Additional Duty (SAD) of Customs was paid earlier, and the VAT payment was made within the required timeframe. The appellant had complied with the conditions for refund eligibility as per Notification No. 102/2007-Cus, which required the sale of goods in the domestic market on payment of Sales Tax/VAT, along with producing documents evidencing SAD payment and sales tax payment within one year from the SAD payment date. The appellant had met all substantive conditions for the refund, despite the VAT payment being made after the filing of the refund claim.

The Assistant Commissioner for the Revenue acknowledged the facts presented by the appellant but maintained that the VAT liability was not discharged at the time of filing the refund claim, leading to the rejection of the refund. However, the Tribunal found that the rejection of the refund claim on technical grounds was not legally sustainable. The Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal, with any consequential relief to be granted in accordance with the law.