2020 (2) TMI 1212 - AT - Customs

Tribunal upholds refund claim for Additional Duty of Customs beyond time limit based on High Court ruling.

Commissioner of Customs-New Delhi (ICD TKD) Versus Radial Rubber Industries

The Tribunal upheld the Commissioner (Appeals)'s decision to allow a refund claim of Additional Duty of Customs, even if filed beyond the one-year ... Refund of Additional Duty of Customs paid - respondent had claimed refund of this Additional Duty in view of the notification dated 14 September, 2007 by notification - time limitation for filing refund claim - requirement of filing claim before the expiry of one year from the date of payment of Additional Duty - HELD THAT:- The exemption granted under notification dated 14 September, 2007 requires fulfillment of certain conditions. The importer has to pay on the sale of the goods appropriate sales tax or value added tax and has to provide copies of documents with the refund claim evidencing payment of said Additional Duty, invoices of sale of the imported goods in respect of which refund of the said Additional Duty is claimed and documents evidencing payment of appropriate sales tax by the importer on the sale of such imported goods. These conditions were examined by the Delhi High Court in Sony India [] while arriving at a conclusion that the limitation provided in the notification dated 1 August, 2018 that the refund has to be made within a period of one year from the date of payment of Additional Duty, has to be read down. The decision of the Delhi High Court in Sony India was binding on the Tribunal but it has been distinguished for a reason that is not borne out from a plain reading of the conditions set out in the notification. Learned Authorized Representative of the Department has also submitted that the judgment of the Delhi High Court in Sony India would not be applicable for the reason that the refund in that case was filed at a time when the amended notification dated 1 August, 2008 had not been issued - This submission cannot be accepted for the simple reason that the Delhi High Court has not allowed the refund claims for the said reason. It has allowed the refund claims as the limitation of one year provided for in the amended notification dated 1 August, 2008 has to be read down in as much as the right to claim refund could accrue to an importer only when the subsequent sale is completed and given the vagaries of the market, the importer has limited control over when the sale would be complete. It is for this reason that the Delhi High Court held that to allow the limitation period to start from the date of payment of duty as prescribed under the amended notification, would allow commencement of a limitation period for refund even before the right to claim refund actually accrued. The Delhi High Court, therefore, held that neither section 27 of the Customs Act nor the amended notification dated 1 August, 2008 can impose a limitation period on the right of an importer to claim refund of Additional Duty and in any case such limitation can only be introduced by legislation. In view of the decision of the Delhi High Court in Sony India, the Commissioner (Appeals) was justified in allowing the claim for refund of Additional Duty, even if the claim was filed beyond a period of one year from the date of payment of Additional Duty. Appeal dismissed - decided against appellant. Issues Involved:1. Refund claim of Additional Duty of Customs.2. Limitation period for filing refund claims.3. Applicability of judgments from different High Courts.Detailed Analysis:1. Refund Claim of Additional Duty of Customs:The respondent, Radial Rubber Industries, filed a refund claim of Rs. 3,67,553/- for Additional Duty of Customs paid under section 3(5) of the Customs Tariff Act, 1975. The Assistant Commissioner sanctioned Rs. 2,09,416/- but rejected Rs. 1,58,137/- for being beyond the stipulated period. The Commissioner (Appeals) allowed the refund based on the Delhi High Court's judgment in Sony India Pvt. Ltd. v/s Commissioner of Customs, New Delhi, which was subsequently followed in Gulati Sales Corporation.2. Limitation Period for Filing Refund Claims:The core issue is whether the one-year limitation period for filing a refund claim, as stipulated by the notification dated 1 August, 2008, is applicable. The Delhi High Court in Sony India held that no limitation can be imposed for refund claims of Additional Duty under section 3(5) of the Tariff Act, as the right to claim refund accrues only upon subsequent sale. The Court emphasized that such limitations can only be introduced by legislation, not subordinate legislation. The Bombay High Court in CMS Info System Ltd. had a contrary view, but the Tribunal followed the Delhi High Court's ruling, as it was the jurisdictional High Court.3. Applicability of Judgments from Different High Courts:The Tribunal noted that when faced with conflicting High Court judgments, it should follow the jurisdictional High Court's decision. The Delhi High Court's ruling in Sony India was binding, and thus, the Tribunal upheld the Commissioner (Appeals)'s order allowing the refund claim. The Tribunal dismissed the Department's appeal, maintaining that the limitation period stipulated in the notification dated 1 August, 2008, should be read down in line with the Delhi High Court's interpretation.Conclusion:The Tribunal concluded that the Commissioner (Appeals) was justified in allowing the refund claim even if filed beyond one year from the date of payment of Additional Duty, following the binding precedent set by the Delhi High Court in Sony India. The appeal by the Department was dismissed.