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2021 (12) TMI 684 - AT - CustomsRefund claim of Special Additional Duty (SAD), under Customs Act, in lieu of sales tax - rejection on the ground of time limitation - HELD THAT - The facts are not in dispute and admittedly, the appellant importer has filed refund claim after more than one year or may be by few days more, from the date of payment of SAD. Hon ble Delhi High Court judgement in SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS 2014 (4) TMI 870 - DELHI HIGH COURT has held that Section 27 was understood as not applying to SAD refund cases, even though it was in the statute book for many years. Yet, with the introduction of the circular and then the notification (No.93), the Customs authorities started insisting that such limitation period which was prescribed with effect from 1.8.2008 (by notification ) became applicable. Following the decision of the Hon ble High Court of Delhi and hold that the appellant is entitled to the refund, as their right to claim refund of duty in terms of the Notification has accrued only when the sale took place. The findings of the Hon ble Delhi High Court clearly show understanding of the department with regard to clause of limitation, provided in the Notification. The condition of limitation was not the part of the original notification. It was only with the introduction of Circular No. 6/2008-Cus. and Notification No.93/2008, the department started insisting on the limitation period (of one year) prescribed with effect from 1.8.2008, became applicable. The Hon ble High Court has clearly held that the expression so far as may be used in sub-section (6) of Section 3 of CTA, has to be followed to the extent possible. Merely because Section 27 of the Customs Act provides for a period of limitation for filing refund claim, it cannot be held that even for the purposes of claiming refund in terms of the Notification, the same limitation has to be applied. The Hon ble Delhi High Court has also held that in the matters which deal with substantive rights, such as imposition of penalties and other provisions that adversely affect statutory rights, the parent enactment must clearly impose such obligations; subordinate legislation or Rules cannot prevail or be made, in such case. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether the refund claim of Special Additional Duty (SAD) under the Customs Act was rightly rejected as time-barred. 2. Whether the right to claim refund of SAD arises only upon subsequent sale of imported goods. 3. Applicability of the limitation period for filing refund claims as per Notification No. 93/2008-Cus. 4. Validity of filing duplicate copies of Bills of Entry for refund claims. Issue-wise Detailed Analysis: 1. Whether the refund claim of Special Additional Duty (SAD) under the Customs Act was rightly rejected as time-barred: The appellant's refund claim was rejected by the Adjudicating Authority on the grounds that it was filed beyond the one-year limitation period from the date of payment of SAD, as stipulated in Notification No. 93/2008-Cus. The appellant contended that the right to claim the refund of SAD arises only upon the subsequent sale of the imported goods in the domestic market and payment of sales tax/VAT, hence the limitation period should start from that point. 2. Whether the right to claim refund of SAD arises only upon subsequent sale of imported goods: The appellant argued that the right to claim the refund of SAD crystallizes only on the subsequent sale of the imported goods. They relied on the ruling in "Sony India Pvt. Ltd.," where it was held that the right to claim refund accrues only upon the sale of goods, making any limitation period starting from the date of payment of duty inapplicable. The Delhi High Court in "Sony India" emphasized that the exemption provided in the original notification is conditional upon subsequent sale. 3. Applicability of the limitation period for filing refund claims as per Notification No. 93/2008-Cus: The Tribunal analyzed conflicting judgments from the Delhi High Court and the Bombay High Court. The Delhi High Court in "Sony India" ruled that no limitation period can be imposed for refund claims as the right to claim refund accrues only upon sale. Conversely, the Bombay High Court in "CMS Infosystem Ltd." held that the limitation period prescribed in the Customs Act applies to SAD refunds, emphasizing that all conditions of the exemption notification, including the limitation period, must be complied with. 4. Validity of filing duplicate copies of Bills of Entry for refund claims: Regarding the submission of duplicate copies of Bills of Entry, the appellant cited the case of "Commissioner of Customs and C. Ex., Noida vs. Progressive Alloys (I) Pvt. Ltd.," arguing that the rejection of the refund claim on this ground violated principles of natural justice. Judgment: The Tribunal, after considering the rival contentions and the judgments cited, followed the Delhi High Court's decision in "Sony India." It was held that the right to claim refund of SAD arises only upon the subsequent sale of the imported goods. The Tribunal noted that the findings of the Delhi High Court were not disturbed or distinguished by the Bombay High Court. Therefore, the appellant's refund claim was deemed valid as the right to claim refund accrued only upon the subsequent sale. The appeal was allowed, and the impugned order rejecting the refund claim was set aside, entitling the appellant to consequential benefits in accordance with the law. The Tribunal emphasized that merely because Section 27 of the Customs Act provides for a limitation period, it cannot be automatically applied to SAD refunds, especially when the right to refund accrues only upon subsequent sale.
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