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Issues: (i) Whether refund of special additional duty under Notification No. 102/2007-Cus. could be denied for want of exact endorsement in some sales invoices after the department had misplaced the original refund records and the appellant had reconstructed the file; (ii) Whether the appellant was entitled to consequential interest on the refunded amount.
Issue (i): Whether refund of special additional duty under Notification No. 102/2007-Cus. could be denied for want of exact endorsement in some sales invoices after the department had misplaced the original refund records and the appellant had reconstructed the file.
Analysis: The refund notification is a beneficial scheme meant to neutralize the burden of special additional duty where imported goods are subsequently sold on payment of VAT or sales tax. The endorsement condition is directed at preventing double benefit and is procedural in character. Where payment of duty, subsequent VAT or sales tax paid sale, and documentary linkage are otherwise established, refund cannot be denied on a hyper-technical view of the endorsement requirement. The original records having been misplaced by the department, adverse inference could not be drawn against the appellant on the basis of reconstructed copies, especially when the appellant had substantially complied and had even accepted proportionate exclusion wherever endorsement omission was admitted.
Conclusion: The refund claim was allowable and the denial was unsustainable in the facts of the case.
Issue (ii): Whether the appellant was entitled to consequential interest on the refunded amount.
Analysis: Once the refund was held admissible, the prolonged retention of the amounts due to repeated adjudication and departmental lapse in preserving records justified grant of statutory interest on the refunded sum.
Conclusion: The appellant was entitled to consequential interest under Section 27A of the Customs Act, 1962.
Final Conclusion: The rejection of the SAD refund claims was set aside and the appellant obtained refund relief with interest, subject to lawful proportionate adjustment wherever endorsed compliance was admittedly not available.
Ratio Decidendi: In a beneficial SAD refund scheme, absence or imperfection of invoice endorsement does not defeat refund where the substantive conditions of import duty payment and VAT or sales tax-paid subsequent sale are established, and the department cannot rely on missing records of its own making to deny relief.
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