2015 (6) TMI 687 - AT - Customs

Denial of refund claim - Refund of SAD - Bar of limitation - Held that - there is no limitation for refund of SAD prescribed under Section 27. Further, I agree with the Hon ble High Court as held in Sony India case (2014 (4) TMI 870 - DELHI HIGH COURT), that limitation period cannot be started before the claim has crystallized. Accordingly, I hold that the appellant is entitled to refund of SAD. - Decided in favour of assessee.

Summary

Issues Involved:
1. Limitation period for filing refund claims of Special Additional Duty (SAD).
2. Applicability of Section 27 of the Customs Act, 1962 to SAD refund claims.
3. Interpretation and retrospective applicability of Notification No. 93/2008-Cus.

Issue-wise Detailed Analysis:

1. Limitation Period for Filing Refund Claims of Special Additional Duty (SAD):
The appellant, an importer and manufacturer of bulk drugs, filed refund claims for SAD paid at the time of import. The claims were rejected on the ground of limitation, as they were filed beyond one year from the date of payment of SAD, as prescribed by Notification No. 93/2008-Cus. The appellant contested this rejection, arguing that the limitation period should not apply retrospectively and that the right to claim refund arises only upon the subsequent sale of goods.

2. Applicability of Section 27 of the Customs Act, 1962 to SAD Refund Claims:
The appellant argued that the limitation period under Section 27 of the Customs Act should not apply to SAD refunds. The Hon'ble Delhi High Court in the case of Sony India Pvt. Ltd. vs. Commissioner of Customs, New Delhi, held that the provisions of the Customs Act on the rules and mechanism for refund are incorporated by reference into the Customs Tariff Act only "so far as may be" applicable. Since SAD is refundable only upon subsequent sale, the limitation period cannot start before the right to claim refund accrues. The court opined that the refund provisions under the Customs Act are inapplicable to duties levied under Section 3(5) of the Customs Tariff Act, and a limitation period cannot be imposed via subordinate legislation.

3. Interpretation and Retrospective Applicability of Notification No. 93/2008-Cus:
Notification No. 93/2008-Cus introduced a one-year limitation period for filing SAD refund claims, which was not present in the original Notification No. 102/2007-Cus. The appellant relied on the Delhi High Court's decision in Sony India, which read down the notification to the extent it imposed a limitation period, holding that such a period cannot be prescribed before the refund claim crystallizes. The court emphasized that legislative policy aspects, such as the period of limitation, must be introduced by legislation and not through subordinate legislation.

Conclusion:
The Tribunal agreed with the appellant's contention and the Delhi High Court's ruling in Sony India. It held that there is no limitation for refund of SAD prescribed under Section 27 of the Customs Act and that the limitation period cannot start before the refund claim has crystallized. Consequently, the appellant was entitled to the refund of SAD. The Tribunal allowed the appeal and directed the adjudicating authority to grant the refund with interest as per rules within six weeks from the production of a copy of the order.