2019 (9) TMI 1563 - AT - Customs

Refund Claim for Special Additional Duty Denied for Late Filing

The Tribunal upheld the rejection of the refund claim for Special Additional Duty (SAD) due to filing after the stipulated one-year period. Citing the ... Refund of Special Additional Duty (SAD) - Rejection of refund on the ground that the claim was filed filed after the period of one year - violation of time limitation as prescribed under N/N. 102/2007-Cus., dated 14-9-2007 read with N/N. 93/2008, dated 1-8-2008 - ambiguity in exemption notification - benefit of doubt to be available to assessee or to Revenue - HELD THAT:- The Hon’ble High Court of Delhi in SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS [2014 (4) TMI 870 - DELHI HIGH COURT] framed the question of law only with respect to retrospective application of the amendment but also held that the amending notification must be read down to the extent it imposes a time limit for filing the refund claim. Evidently, if an importer resells the goods and files the refund claim within the period, they will be put to loss as he will be bearing both the burden of SAD and the VAT which he would pay while selling the goods. The Hon’ble High Court of Bombay in M/S. CMS INFO SYSTEMS LIMITED VERSUS THE UNION OF INDIA & OTHERS [2017 (1) TMI 786 - BOMBAY HIGH COURT] on the other hand held that it is not open for the importer to pick and choose parts of the exemption notification that suits while ignoring those that don’t. The Hon’ble High Court of Bombay also held that Special Additional Duty of Customs is also in the nature of customs duty and it is not a duty on sale of goods. It further held that the importer does not have any vested, let alone absolute right, for refund of the SAD. There were contrary decisions - the matter was referred to a Five-Judge Constitutional Bench of the Supreme Court in the case of Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company [2018 (7) TMI 1826 - SUPREME COURT] - the judgment of the Hon’ble High Court of Bombay in the case of CMS Info System [2017 (1) TMI 786 - BOMBAY HIGH COURT] is consistent with the ratio of Dilip Kumar’s case, which is required to be followed, where it was held that When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. The refund application of the importer beyond the time limit has been correctly rejected by the lower authorities - appeal dismissed - decided against appellant. Issues Involved:1. Entitlement to refund of Special Additional Duty (SAD) despite filing the refund claim after the stipulated one-year period.2. Applicability of Section 27 of the Customs Act, 1962 to SAD refunds.3. Interpretation of exemption notifications and their conditions, specifically regarding the time limit for filing refund claims.Detailed Analysis:Issue 1: Entitlement to Refund of SAD Despite Filing After One YearThe appellants imported goods and paid SAD at 4%, seeking a refund under Notification No. 102/2007-Cus., read with Notification No. 93/2008. The key condition was filing the refund claim within one year. The appellants filed the claim after one year, leading to rejection by lower authorities. They argued that the benefit of refund should not be denied due to the delay, citing the Delhi High Court's judgment in Sony India Pvt. Ltd. v. CC, which held that the one-year limitation should not apply to SAD refunds. Conversely, the respondent cited the Bombay High Court's judgment in CMS Info Systems Ltd. v. Union of India, which upheld the one-year limit for SAD refunds, stating that the exemption is conditional and all conditions must be met.Issue 2: Applicability of Section 27 of the Customs Act, 1962 to SAD RefundsThe Delhi High Court in Sony India held that Section 27 of the Customs Act, which includes a one-year limitation for refunds, does not apply to SAD refunds. However, the Bombay High Court in CMS Info Systems Ltd. differed, stating that Section 3(5) of the Customs Tariff Act incorporates the Customs Act provisions, including Section 27, making the one-year limit applicable to SAD refunds. This interpretation was supported by the argument that the exemption notification is conditional and must be adhered to in full, including the time limit.Issue 3: Interpretation of Exemption NotificationsThe core issue is the interpretation of the exemption notification. The Delhi High Court took a liberal approach, emphasizing the purpose of SAD to level the playing field between imported and domestic goods. It held that the time limit for refund claims should not restrict the substantive right to a refund. Conversely, the Bombay High Court adopted a strict interpretation, asserting that all conditions, including the time limit, must be fulfilled. This strict interpretation aligns with the Constitutional Bench's judgment in Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company, which mandates strict interpretation of exemption notifications, with any ambiguity resolved in favor of the Revenue.Conclusion:The Tribunal upheld the rejection of the refund claim, aligning with the Bombay High Court's strict interpretation and the Supreme Court's directive in Dilip Kumar & Company. The appeal was rejected, and the lower authorities' decision was affirmed, emphasizing that exemption notifications must be strictly interpreted, including adherence to the stipulated time limits for filing refund claims.