Revenue cannot deny SAD refund when payment made through DEPB scrip instead of cash

CESTAT Kolkata dismissed Revenue's appeal regarding SAD refund where payment was made through DEPB scrip rather than cash. The Tribunal upheld the Commissioner (Appeals) order following Delhi HC precedent in Allen Diesels India case, which held that departmental circulars cannot introduce additional refund conditions not present in the original Notification No. 102/2007-Customs. The judicial pronouncement established that such circulars improperly amended the notification by adding unauthorized eligibility criteria for refunds.

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Issues Involved:

1. Refund of Special Additional Duty (SAD) paid using DEPB scrips.
2. Validity of circulars imposing additional conditions for refund.
3. Fulfillment of conditions under Notification No. 102/2007-Customs.

Summary:

Refund of Special Additional Duty (SAD) Paid Using DEPB Scrips:

The respondent imported Sulphuric Acid Brown and paid Customs duty, including SAD, using DEPB scrips and cash. They filed for a refund of SAD, which was partially sanctioned for the amount paid in cash but rejected for the amount paid using DEPB scrips. The Commissioner (Appeals) allowed the refund for the DEPB scrips portion, leading to the Revenue's appeal.

Validity of Circulars Imposing Additional Conditions for Refund:

The Hon'ble Delhi High Court in Allen Diesels India Private Limited Vs. Union of India (2016) ruled that circulars issued by C.B.E. & C. (Nos. 6/2008, 10/2012, and 18/2013) imposing additional restrictions for refund of SAD paid using DEPB scrips were ultra vires. The court emphasized that any amendment to a notification under Section 25(1) of the Act must be through another notification and not via circulars. The rejection of refund applications based on these circulars was deemed invalid.

Fulfillment of Conditions Under Notification No. 102/2007-Customs:

The Tribunal, in Virgo Suitings Private Limited (2022), reiterated that the Notification dated 14/09/2007, as amended, did not deny refunds for duties paid using DEPB scrips. The Tribunal noted that the appellant fulfilled the conditions of the notification, and thus, the refund should not be denied. This position was supported by multiple judicial pronouncements, including those of the Hon'ble High Court, establishing that payment through DEPB scrips is a valid mode of duty payment.

Conclusion:

The Tribunal found that the issue is no longer res-integra and upheld the Commissioner (Appeals) order, dismissing the Revenue's appeal. The Tribunal concluded that there was no justification for rejecting the refund claim for the duty paid through DEPB scrips, aligning with the judicial precedents and legal principles established by higher courts.

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