2021 (12) TMI 1191 - AT - Customs

Tribunal Grants Refund Claim for Special Additional Duty, Emphasizing Substantive Rights Over Procedural Technicalities

The Tribunal allowed the appellant's refund claim for Special Additional Duty (SAD), holding that the limitation period for filing the claim should start ... Refund claim of Special Additional Duty (SAD), which is in lieu of sales tax - rejection on the ground of time limitation - HELD THAT:- The facts are not in dispute and admittedly, the appellant importer has filed refund claim after more than one year or may be by few days more from the date of payment of SAD. Hon’ble Delhi High Court judgement in SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS [2014 (4) TMI 870 - DELHI HIGH COURT] where it was held that In the absence of specific provision of Section 27 being made applicable in the said notification, the time-limit prescribed in this section would not be automatically applicable to refunds under the notification. The Hon’ble Delhi High Court has also held that in the matters which deal with substantive rights, such as imposition of penalties and other provisions, that adversely affect statutory rights, the parent enactment must clearly impose such obligations; subordinate legislation or Rules cannot prevail, or be made in such case. The appeal filed by the appellant is allowed - decided in favor of assessee. Issues Involved:1. Whether the refund claim of Special Additional Duty (SAD) was rightly rejected as time-barred.2. Applicability of the limitation period for filing the refund claim.3. Interpretation of the term 'so far as may be' in the context of Section 27 of the Customs Act.4. Compliance with procedural requirements for refund claim submission.Issue-wise Detailed Analysis:1. Whether the refund claim of Special Additional Duty (SAD) was rightly rejected as time-barred:The appellant, an importer, resells goods and deposits SAD at the time of import. Upon resale and payment of sales tax, the importer is entitled to a refund of SAD under Notification No. 102/2007-Cus. The appellant's refund claim was rejected by the Adjudicating Authority as time-barred because it was filed beyond one year from the date of SAD payment, as stipulated in the amended Notification No. 93/2008-Cus.2. Applicability of the limitation period for filing the refund claim:The appellant argued that the right to claim a refund arises only upon subsequent sale and payment of sales tax/VAT, and the limitation period should start from this event, not from the date of SAD payment. The appellant cited several rulings supporting this view, including the Delhi High Court's decision in Sony India Pvt. Ltd. The Commissioner (Appeals) relied on rulings that upheld the one-year limitation period from the date of SAD payment, distinguishing the Sony India case. The Tribunal, however, found the Delhi High Court's reasoning in Sony India persuasive, emphasizing that the right to claim a refund accrues only upon subsequent sale, making the imposition of a limitation period from the date of payment unreasonable.3. Interpretation of the term 'so far as may be' in the context of Section 27 of the Customs Act:The Delhi High Court in Sony India held that the provisions of the Customs Act, including the mechanism for refunds, are incorporated into the Customs Tariff Act (CTA) 'so far as may be applicable.' This phrase implies that specific provisions, such as the limitation period, should not automatically apply if they do not fit the context of SAD refunds, which depend on subsequent sales. The Bombay High Court disagreed, asserting that the Customs Act's provisions, including the limitation period, apply to SAD refunds. The Tribunal sided with the Delhi High Court, noting that the limitation period should not commence before the right to claim a refund has accrued.4. Compliance with procedural requirements for refund claim submission:The appellant also faced issues with submitting duplicate copies of Bills of Entry instead of originals. The Tribunal acknowledged the appellant's reliance on the case of Commissioner of Customs and C. Ex., Noida vs. Progressive Alloys (I) Pvt. Ltd., which addressed similar procedural concerns. The Tribunal found that the appellant's procedural compliance issues did not justify rejecting the refund claim, especially given the broader context of the substantive right to a refund.Conclusion:The Tribunal concluded that the appellant's right to claim a refund arises only upon the subsequent sale of goods, and the limitation period should start from this event. The Tribunal followed the Delhi High Court's decision in Sony India, setting aside the impugned order and allowing the refund claim with consequential benefits. The Tribunal emphasized that subordinate legislation or rules cannot override substantive rights provided by the parent enactment, and procedural requirements should not unjustly impede the right to a refund.