2025 (12) TMI 900 - AT - Customs

SAD refund not time-barred; traders treated exempt u/s3(5) CTA, s.27 Customs Act inapplicable for refund claims

CESTAT Mum allowed the appeal, setting aside rejection of refund of Special Additional Duty (SAD) on the ground of limitation under s.27 of the Customs ... Refund of SAD - rejection of refund on the ground of time limitation u/s 27 of the Customs Act, 1962 - HELD THAT:- Strictly speaking, the appellant, as trader in imported goods, is exempted from ‘special additional duty (SAD)’ and it is merely the machinery provision that give effect through refund route, post-clearance, on ascertainment of discharge of corresponding levies of state governments. Consequently, the fastening of any limitation, not contemplated by the statute to such levy in section 3(5) of Customs Tariff Act, 1975, is ultra vires as held by Hon'ble High Court of Delhi in Sony India Pvt Ltd v. Commissioner of Custom, New Delhi [2014 (4) TMI 870 - DELHI HIGH COURT]. The Larger Bench of the Tribunal have, re Ambey Sales [2024 (6) TMI 257 - CESTAT CHANDIGARH-LB], held that 'The time limit imposed upon an importer for filing a refund claim of additional duty of customs paid on the imported goods with the jurisdictional customs officer before the expiry of one year from the date of payment of said additional duty of customs in terms of the notification dated 01.08.2008 would not be applicable.' The facts are conclusive is that the goods were imported and sold thereafter. Duty liability, under section 3(5) Customs Tariff Act, 1975, is fastened on the goods only to the extent that the importer consumes the goods. With sale having been effected and due discharge of appropriate tax, the eligibility to refund cannot be denied by recourse to an unrelated ‘relevant date’ in section 27 of Customs Act, 1962. The impugned order is set aside - appeal allowed. Appeal concerned rejection of refund of Rs. 2,60,793 of 'special additional duty of customs (SAD)' paid under section 3(5) of the Customs Tariff Act, 1975 on imported PVC coated fabric, on the ground of limitation under section 27 of the Customs Act, 1962 and the one-year condition in Notification No. 102/2007-Cus. The appellant argued that refund under Notification No. 102/2007-Cus becomes claimable only after subsequent sale of the imported goods and was filed within one year of such sale. Reliance was placed on the Larger Bench ruling in Ambey Sales v. Commissioner of Customs, Ludhiana, which, following the Delhi High Court in Sony India Pvt. Ltd. v. Commissioner of Customs, New Delhi, held that 'the time limit... in terms of the notification dated 01.08.2008 would not be applicable.' The Tribunal emphasized that traders are effectively exempt from SAD and that the refund mechanism is a machinery provision. Imposing a limitation period not contemplated in section 3(5) is ultra vires. Once the goods are sold and appropriate state levies discharged, refund eligibility cannot be defeated by importing an unrelated 'relevant date' from section 27. The appeal was allowed and the refund denial set aside.