2020 (10) TMI 448 - HC - Customs

High Court rules importer entitled to SAD refund if VAT/Sales Tax paid, quashes challenged orders

The High Court of Madras ruled in favor of the importer in a case concerning the refund of Special Additional Duty (SAD) of Customs. The Court held that ... Refund of SAD - sanctions were reviewed under Section 129D(2) of the Customs Act and found to be incorrect - N/N. 102/2007 dated 14.09.2007 - HELD THAT:- The CESTAT, had earlier passed orders in favour of the dealers, holding that, so long as appropriate VAT/Sales Tax was paid, the SAD refund was admissible. These CESTAT orders were referred to by the learned Standing Counsel for the department and had conceded that the issue of refund of SAD was in favour of the importer and accordingly, this Court, in the cases of M/S. GOYAL IMPEX AND INDUSTRIES LIMITED VERSUS THE ASSISTANT COMMISSIONER OF CUSTOMS CHENNAI (REFUNDS-SEA) [2019 (9) TMI 1331 - MADRAS HIGH COURT ] and M/S. ADITYA INTERNATIONAL LTD, M/S. GOYAL IMPEX & INDUSTRIES LTD, M/S. AACHI MASALA FOODS PVT. LTD, VERSUS THE COMMISSIONER OF CUSTOMS (APPEALS-II) , THE ASSISTANT COMMISSIONER OF CUSTOMS (REFUNDS-SEAPORT) , THE ASSISTANT COMMISSIONER OF CUSTOMS [2020 (4) TMI 317 - MADRAS HIGH COURT], had allowed the writ petitions and ordered for refund of the SAD in favour of the importer. Petition allowed. Issues:1. Refund of Special Additional Duty (SAD) of Customs based on payment of VAT on subsequent sale of imported goods.2. Review of sanctions under Section 129D(2) of the Customs Act.3. Challenge to orders of recovery of refunds granted earlier.4. Admissibility of SAD refund based on payment of appropriate VAT/Sales Tax.5. Concession by the Standing Counsel for the department regarding the issue of refund of SAD.Analysis:The High Court of Madras addressed multiple issues related to the refund of Special Additional Duty (SAD) of Customs in the present judgment. Initially, the Court noted that refunds of the 4% Special Additional Duty of Customs were sanctioned based on the importer establishing payment of VAT on the subsequent sale of the imported goods, in accordance with Notification No.102/2007. However, these sanctions were later reviewed under Section 129D(2) of the Customs Act, leading to the Customs authorities challenging the refund sanctions, resulting in orders of recovery of the refunds granted earlier. This aspect formed the basis of the challenge in the Writ Petitions (W.P.Nos.246 to 253 of 2017).The Court considered the decisions of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in favor of the dealers, emphasizing that as long as appropriate VAT/Sales Tax was paid, the SAD refund was admissible. The learned Standing Counsel for the department acknowledged the favorable nature of the issue of refund of SAD for the importer, referencing earlier decisions of the Court in similar cases. Notably, the Court had previously ruled in cases such as Goyel Impex and Industries Limited vs. The Assistant Commissioner of Customs, Chennai and M/s. Aditya International Ltd. & Others vs. The Commissioner of Customs (Appeals-II) & Others, where writ petitions were allowed, ordering the refund of SAD in favor of the importer.Consequently, the Standing Counsel for the respondents also conceded that the issue of refund of SAD was in favor of the petitioner in the present case, aligning with the earlier decisions of the Court. As a result, the Court quashed all the impugned orders and allowed the Writ Petitions, without imposing any costs. The judgment brought closure to the connected miscellaneous petitions, concluding the legal proceedings on the matter.