[Order]. - The appellant M/s. Purab Textile Pvt. Ltd. imported certain goods for resale for certain Bill of Entry (31 in number) and deposited the customs duty including SAD vide TR-6 challan smarting period from 7-4-2010 to 21-2-2011. Pursuant to the resale made by the appellant and payment of sales tax, the appellant as per the scheme of the Act and the Rules being entitled to refund of the SAD deposited at the time of import, applied for refund on 27-9-2012 along with duplicate copy and enclosed copy of Bill of Entry duly attested by the Sr. Intelligence Officer, DRI, Surat, Xerox copy of TR-6 challan for payment of SAD in full, original invoices of the sale of the imported goods with respect to which the claim and further declaration by the appellant-importer that it is registered with the jurisdictional Sales Tax authorities (Maharashtra) and submitted document evidencing payment of appropriate Sales Tax/VAT. Further, it is recorded that the sale invoice also mentions the TIN No. (under Sales Tax) of the importer. Further, the claim was supported by C.A. certificate that the VAT has been charged and paid on all the imported goods sold to the consumer. The certificate further certified that SAD and customs duty has been paid by the importer and the burden of SAD has not been passed on to the buyer of the goods. Further, the amount of refund claim is shown in the Books of Account as amount due, and receivable from the Customs Department. As it appeared to the Revenue that the refund claim is time barred a show cause notice was issued. Vide Order-in-Original dated 24-9-2013, the refund claim was rejected recording the finding that the documents submitted by the importer have been attested by the Sr. Intelligence Officer, DRI vide their letter dated 7-8-2012, it was found that the document has been seized by the DRI under panchanama dated 27-3-2012. On verification, it was seen that for the purpose of refund of SAD, the documents were returned to the importer vide forwarding letter dated 7-8-2012 by the DRI. As the duty (SAD) was deposited by the last challan dated 14-2-2011, it was found that importer has not submitted the refund claim within the stipulated period of one year from the date of SAD/TR-6 challan. It is further recorded that the documents were seized under Panchanama dated 27-3-2012 which is after a period of one year from the date of last payment on 21-2-2011, the refund claim was held to be time barred in terms of Notification No. 102/2007 as amended by Notification No. 93/2008 and also in terms of Circular No. 16/2008.
2. Being aggrieved, the appellant preferred appeal before the Commissioner (Appeals) who vide the impugned order was pleased to uphold the finding in the Order-in-Original rejecting the refund. Being aggrieved, the appellant is before this Tribunal.
3. The learned Counsel for the appellant urged that the issue is no longer res integra. The Hon’ble Delhi High Court in the case of Sony India Pvt. Ltd. v. Commissioner of Customs, New Delhi - (Del.) have held that since SAD - customs duty is refundable only on subsequent sale of the goods, pursuant to import, no limitation period can be imposed for denying refund claim. Right to claim refund only accrues to importer once resale is made, which is entirely market dependable, given vagaries of market, the importer has limited control over the period of resale. To uphold limitation period starting from date of payment of duty (SAD), as prescribed in amending Notification No. 93/2008-Cus., would amount to allowing commencement of limitation period for refund claims before the right of refund has even accrued. The Hon’ble High Court was of the opinion that the refund provisions under the Customs Act are not applicable to duty levied under Section 3(5) of Customs Tariff Act, 1975. Thus, neither Section 27 nor the Notification under Section 25(1), such as amending Notification No. 93/2008 can be used to impose a limitation period on the right to claim refund of additional duty of Customs paid under Section 3(5) of the CTA. It was further observed by the Hon’ble High Court that if a limitation period is sought to be imposed in a case where the importer claims the refund of SAD, owing to having incurred Sales Tax/VAT liability on subsequent sale of goods, it must be introduced by legislation, given the expropriatory consequences of such a limitation period. It was further observed that in a case of SAD, which is a levy meant to offset any advantage (in lieu of Sales Tax), there is an inherent right to refund, once the importer shows that the goods have been sold or the other taxation incident i.e. payment of VAT occurs. It was further observed that prior to 2008 before the Notification No. 93/2008, no period of limitation was specified. The Hon’ble High Court further observed that Section 27 was understood as not applicable to SAD cases even though it was in the statute book for many years. It was further observed by the Hon’ble High Court that essential legislative policy aspects (period of limitation being one such aspect) cannot be formulated or prescribed by subordinate legislation i.e. by way of Notification or Circular. Accordingly, the Hon’ble High Court held that the imposition of a period of limitation for the first time, without statutory amendment, through a notification, therefore could not prevail. Accordingly, the appellant prays for allowing the appeal with consequential benefit.
4. The learned AR for the Revenue relies on the impugned order. Learned AR further states that in the case of Sony India (supra), the question framed by the Hon’ble Delhi High Court was -
“Can period of limitation for preferring refund claims, specified in the amending Notification No. 93/2008-Cus. be made applicable with retrospective effect, in absence of a limitation period in the original Notification No. 102/2007-Cus., in respect of goods imported prior to the issue of the amending notification.”
Accordingly, in view of the question framed, it is strongly contended by the learned AR that ruling of Delhi High Court in Sony India (supra) will not apply to the facts of the present appeal, more so because admittedly SAD have been paid during the period April, 2010 to Feb., 2011, which is post Notification No. 93/2008. There is no question of retrospective effect of Notification and/or period of limitation.
5. Having considered the rival contentions, I agree with the finding of the Hon’ble Delhi High Court that period of limitation cannot start prior to the date of crystallization to the right to refund. Secondly, the right to refund is prescribed by the Notification No. 102/2007. Accordingly, I hold that the rejection of the claim of refund in the appellant’s case on the ground of limitation is bad and not tenable. Accordingly, the impugned orders are set aside. It is held that the claim of the appellant is not time barred. I remand the case back to the adjudicating authority to decide the claim on merits. Thus, the appeal is allowed by way of remand.
6. The Cross-Objection filed by the Revenue is also disposed of accordingly. The adjudicating authority will dispose of the refund claim on merits preferably within a period of eight weeks from the date of receipt or service of a copy of this order.
(Dictated and pronounced in Court)