2023 (2) TMI 143 - AT - Customs

Refund of SAD (Special Addition Duty) - rejection on the ground of time limitation - N/N. 102/2007-Cus - Vide Notification No. 93/2008-Cus, Clause 2(C) of the Notification No. 102/2007-Cus was substituted, the effect of substitution on was that one year period was insisted upon for filing of refund application from the date of payment on SAD. HELD THAT - The rejection of refund on the ground of limitation by the court below is bad and is in the teeth of the ruling of the Hon ble Delhi High Court in the case of SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS 2014 (4) TMI 870 - DELHI HIGH COURT where it was held that This Court holds that the amending notification must be read down to the extent that it imposes a limitation period. Thus, court below have erred in rejection of refund claim on the ground of limitation - The Adjudicating Authority is directed to grant the refund of SAD within a period of 45 days from receipt/service of copy of this order with interest as per rules, after verifying the bar of unjust enrichment. - Accordingly, the impugned order is set aside and the appeal is allowed.

Summary

Issues:
Whether the refund of Special Addition Duty (SAD) has been rightly rejected on the ground of limitation.

Analysis:
The appellant imported goods for resale and deposited Customs Duty along with SAD. The appellant applied for a refund of the SAD amount as per Notification No. 102/2007-Cus, which provides for exemption under Section 25(i) of the SAD paid on imported goods for subsequent sale. The conditions for refund include payment of all duties, issuance of a specific invoice, filing a refund claim, payment of sales tax or VAT, and providing necessary documents. Subsequently, a notification amended the time limit for filing refund claims to within one year from the payment date of SAD.

The Assistant Commissioner rejected the refund claim based on this new limitation period, which was upheld by the Commissioner (Appeals). However, the appellant argued that the issue was settled in favor of the appellant-assessee by the Delhi High Court in previous cases. The High Court held that the original notification did not prescribe any limitation, and limitation cannot be introduced through subordinate legislation. The right to claim a refund of SAD accrues only upon resale of imported goods, subject to payment of VAT/sales tax on resale.

The High Court emphasized that SAD is refundable to the importer after evidence of payment of appropriate sales tax or VAT is produced, to avoid double taxation. Circulars clarified that the limitation period under Section 27 of the Act does not apply to refunds under Notification No. 102/2007-Cus. The Tribunal found that the rejection of the refund claim based on limitation was erroneous, citing the Delhi High Court's rulings. The impugned order was set aside, and the appeal was allowed, directing the Adjudicating Authority to grant the refund with interest within 45 days.

In conclusion, the Tribunal ruled in favor of the appellant, highlighting the importance of following statutory provisions and judicial precedents in refund cases involving SAD.