2022 (6) TMI 436 - HC - Customs

Claim for SAD refund - rejection on the ground of time limitation - additional duty was paid on 05.11.2013 and 30.10.2013 respectively, but the application seeking refund was submitted on 14.11.2014 (i.e), after the expiry of one year from the date of payment of duty - Section 3 (5) of the Customs Tariff Act, 1975 - HELD THAT - It is to be recollected that the claim for refund of SAD duty made by the respondent / assessee, in respect of two Bills of Entry dated 05.11.2013 and 29.10.2013, was rejected, by the adjudicating authority, by order-in-original dated 14.07.2016 on the ground that the said application was filed after the expiry of one year from the date of payment of duty. However, the said order-in-original was set aside by the appellate authority, on the premise that the right to refund arises from the date of sale of the goods and therefore, limitation shall start from the date of sale of the goods and not from the date on which SAD has been paid, following the decision of the Delhi High Court in SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS 2014 (4) TMI 870 - DELHI HIGH COURT . The appellant submitted that the issue involved herein has already been decided by the Bombay High Court in M/S. CMS INFO SYSTEMS LIMITED VERSUS THE UNION OF INDIA OTHERS 2017 (1) TMI 786 - BOMBAY HIGH COURT , wherein, after considering the decision of the Delhi High Court in SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS 2014 (4) TMI 870 - DELHI HIGH COURT it was categorically held that the period of limitation as mentioned in the notification dated 14th September, 2007 as amended by the notification dated 1st August 2008 will operate with all the force and therefore, refund will be governed by the limitation as prescribed in the notification - It is also fairly brought to the notice of this court that the aforesaid decision of the Bombay High Court in CMS Info Systems Ltd's case was put to challenge before the Hon'ble Supreme Court by filing Special Leave to Appeal (Civil)No.11646 of 2017 by the assessee and after granting leave, the same is now, pending consideration. This court, in the given facts and circumstances of the case, sets aside the orders-in-appeals passed by the Appellate Authorities and remands the matter to the Adjudicating Authority for fresh consideration of the application for refund in respect of two Bills of Entry dated 05.11.2013 and 29.10.2013, after providing opportunity of hearing to the parties, based on the outcome of the SLP filed against the order passed by the Bombay High Court in CMS Info System Limited, to be rendered by the Hon'ble Supreme Court. Appeal disposed off.

Summary

Issues involved:
Claim for refund of 4% additional duty of Customs, limitation grounds, rejection of refund claim, appeal process, entitlement to interest on delayed refund, legality of interest on belated refund, applicability of Section 27A of the Customs Act, challenge to order-in-appeal, interpretation of relevant Notifications, decisions of different High Courts, pending consideration by the Supreme Court.

Analysis:

1. Claim for refund and limitation grounds:
The respondent initially filed a claim application for refund of additional duty of Customs, which was rejected for non-submission of documents and on limitation grounds. The appellate authority set aside the rejection and directed a fresh hearing. The adjudicating authority later sanctioned a partial refund but rejected two Bills of Entry due to limitation, as the refund application was filed after one year from the duty payment dates.

2. Entitlement to interest on delayed refund:
The Appellate Authority allowed the appeal filed by the respondent, holding that the claim was within the limitation period from the date of sale, not the duty payment date. The authority also granted interest on the delayed refund beyond three months, citing relevant case laws. The appellant challenged this decision before the CESTAT, arguing against the grant of interest on belated refunds.

3. Applicability of Section 27A of the Customs Act:
The substantial question of law admitted by the High Court revolved around the correctness of granting interest under Section 27A of the Customs Act for a refund consequent to an exemption granted under a specific Notification. The appellant contended that Section 27A was not applicable to the facts of the case, as the refund was based on a special extension granted to importers under relevant Notifications.

4. Interpretation of High Court decisions:
The High Court considered the decisions of the Delhi High Court and the Bombay High Court in similar cases while determining the issue of limitation and interest on delayed refunds. The appellant argued that the decision of the Bombay High Court had not attained finality as it was pending consideration by the Supreme Court.

5. Judgment and remand:
After considering the arguments and the pending Supreme Court case, the High Court set aside the orders-in-appeals and remanded the matter to the Adjudicating Authority for fresh consideration of the refund application for the two Bills of Entry. The remand was based on the outcome of the pending Supreme Court case challenging the decision of the Bombay High Court.

Overall, the High Court disposed of the Civil Miscellaneous Appeal, directing a fresh consideration based on the pending Supreme Court decision, without awarding any costs.