AI Drafter 
TaxTMI 
TaxTMI 
2019 (9) TMI 1563
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....ower authorities and hence this appeal. 2. It is the case of the appellant that once they are entitled to benefit of refund of SAD, they should not be denied the same on the ground that they have filed the refund claim after the period of one year indicated in the exemption notification. They rely upon the judgment of the Hon'ble High Court of Delhi in the case of Sony India Pvt. Ltd. v. CC reported in 2014 (304) E.L.T. 660 (Del.) in which the Hon'ble High Court has held that the limitation of one year should not apply in case of SAD refunds. The same ratio was followed by the Hon'ble High Court of Delhi in 2017 in the case of Gulati Sales Corporation reported in 2018 (360) E.L.T. 277 in a case dealing with imports after the amendment to the notification. 3. Per contra, the Ld. DR reiterates the findings of the lower authorities and asserts that if the exemption is claimed, all the conditions therein must apply in full force and therefore if the application is filed after one year, the appellants are not entitled to refund. Therefore, there is no force in the appeals and therefore they may be rejected. Ld. DR relies on the judgment of Hon'ble High Court of Bombay wi....
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....exemption notification can be ascertained at the time of imports itself. There are other notifications where the conditions may have to be fulfilled post-importation. Wherever the conditions have to be fulfilled post-importation, some mechanism is laid down in the notification itself to ensure that the conditions are fulfilled such as execution of a bond, production of end-user certificates, verification by the Central Excise officers, etc. In this particular exemption Notification No. 102/97 (as amended), the mechanism which has been laid down is that after importing the goods on payment of applicable duties including the Special Additional Duty of Customs, if the importer sells the goods after paying appropriate amount of VAT to the State Government, they are entitled to refund of SAD. For the period 14-9-2007 up to 1-8-2008 no time limit within which an application for refund can be filed was prescribed. An amendment was made vide Notification No. 93/2008, dated 1-8-2008 introducing a time limit of one year from the payment of Special Additional Duty of Customs to file refund claims. The relevant exemption notifications before and after this period are as below : [Notificatio....
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.... satisfying himself that the conditions referred to in para 2 above, are fulfilled. [Notification No. 102/2007-Cus., dated 14-9-2007] [Notification No. 102/2007-Cus., dated 14-9-2007 as amended by Notification No. 93/2008-Cus., dated 1-8-2008] "Exemption from special CVD to all goods imported for subsequent sale when VAT/Sales Tax paid by importer. - In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the goods falling within the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) when imported into India for subsequent sale, from the whole of the additional duty of customs leviable thereon under sub-section (5) of section 3 of the said Customs Tariff Act (hereinafter referred to as the said additional duty). 2. The exemption contained in this notification shall be given effect if the following conditions are fulfilled : (a) the importer of the said goods shall pay all duties, including the said additional duty of customs leviable thereon, as appli....
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....in absence of a limitation period in the original Notification No. 102/2007-Cus. in respect of the goods imported prior to the issue of the amending notification". 9. After examining the question of law framed the Hon'ble High Court of Delhi answered it in favour of the assessee and against the Revenue and allowed the appeal. Though the question of law framed was only with respect to such consignments which were imported prior to the amending Notification No. 93/2008-Cus. and sold after that date and refund claims filed, the Hon'ble High Court of Delhi has also held that provisions of Section 27 (including limitation therein) of the Customs Act, in relation to refund do not apply to SAD cases. Further, the Hon'ble High Court of Delhi has also observed that w.e.f. 1-8-2008, the amending notification has introduced a time limit for claiming refund and that limitation cannot be inserted through a subordinate legislation because it is question of substantive rights of the importer and a statutory amendment is required for that purpose. 10. The Hon'ble High Court of Bombay in the case of CMS Info Systems Ltd. (supra) considered the above judgment of the Hon'ble High Cour....
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....ted. The notification granting exemption and under consideration in the case, enables claiming a refund of duty (SAD) but the power to grant it is in the substantive law. Precisely, that is the case herein. Further, we find that there is an exemption granted and which is conditional. The exemption being conditional, it is not permissible to pick and choose convenient conditions of the exemption notification and leave out those which to parties like the petitioners, appear to be onerous and excessive. We do not see how in the teeth of a clear provision in the exemption notification can the assessee/petitioners before us contend that the exemption notification is valid for everything else but when it comes to period of limitation therein, that is excessive or unfair, unjust and arbitrary. Once the exemption is conditional, then, all the conditions therein have to be complied with. If that provides for refund, but the application in that behalf is to be made within a specified period, then, that cannot be said to be excessive and arbitrary, far from being unfair, unjust and unreasonable. It cannot be termed illegal as well for the simple reason that sub-section (1) of Section 27 of th....
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.... and therefore they are entitled to refund of SAD paid by them even though they filed the refund claim after one year. He also points out that in the case of Gulati Sales Corporation [2018 (360) E.L.T. 277 (Del.)], the Hon'ble High Court of Delhi dealt with a case of importation post amendment of Notification No. 102/2007-Cus. and still held that the limitation of time of one year for filing the refunds does not apply. 12. Per contra, Ld. DR asserts that an exemption notification must be read as it has been drafted with no intendments or modifications. He further submits that in the case of Sony India (supra), the Hon'ble High Court of Delhi was dealing with a case, as may be seen from the question of law framed, whether the goods were imported prior to introduction of the limitation for refund but the refund claim was filed after introduction of the limitations. The present case is similar to the cases dealt with by the Hon'ble High Court of Bombay in CMS Info Systems Ltd. (supra) as the import was done after the introduction of the limitation period. He further asserts that even if the limitation of one year under the amended notification is read down as held by the Hon'b....
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.... not correct and all the decisions which took similar view as in Sun Export case (supra) stands overruled. 53. The instant civil appeal may now he placed before appropriate Bench for considering the case on merits after obtaining orders from the Hon'ble Chief Justice of India." 14. He would assert that the Hon'ble Apex Court has finally put to rest the question of interpretation of exemption notification. It is now the law of the land that exemption notifications should be interpreted strictly and the burden of proving applicability would be on the assessee to show that his goods comes within the parameters of the exemption notification and in case of any ambiguity, the matter must be decided in favour of the Revenue and against the assessee. He would further draw the attention of the Bench that the judgment of Hon'ble High Court of Delhi in the case of Sony India Pvt. Ltd. (supra) was delivered on 16-4-2014 while the judgment of Hon'ble High Court of Mumbai was delivered on 19-12-2016. The judgment of the Constitutional Bench of the Hon'ble Apex Court in the case of Dilip Kumar & Company (supra) finally laying down the law was passed on 30-7-2018. Therefore, ....
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....n is that this is a case of a refund arising out of a conditional notification. 16. We find that the Hon'ble High Court of Delhi has taken a liberal view in interpreting the exemption notification and held that since the purpose of availing the SAD is to provide level playing field between the imported goods and the domestic goods, when the imported goods are resold on payment of VAT to the State Government, the exemption notification provides for refund of SAD. It may or may not be always possible for the importer to resell the goods and file the refund claim within time depending on his market conditions. Taking a liberal view, the Hon'ble High Court held that refund is available without the limitation of one year indicated in the exemption Notification No. 102/97 after amendment. On the other hand, the Hon'ble Bombay High Court has constructed the exemption notification strictly and held that all conditions including the time limit within which the refund claim has to be filed must be fulfilled. We also find that there is no order of the jurisdictional High Court of Madras. However, the question of strict versus liberal interpretations of the exemption notifications has ....