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 Act, 1962. It held that traders in imported goods are effectively exempt from SAD under s.3(5) of the Customs Tariff Act, 1975, with refund being a machinery provision, and that no statutory time limit is prescribed for such refund. Relying on the Larger Bench decision in Ambey Sales, the Tribunal ruled that the one-year time limit in the notification dated 01.08.2008 and the "relevant date" under s.27 are inapplicable. Refund was allowed upon proof of subsequent sale and tax discharge.

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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.

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