SONY INDIA PVT LTD
VS.
THE COMMISIONER OF CUSTOM, NEW DELHI
(In the High Court of DELHI)
SAD Refund: Limitation Period is not applicable.
Statutory provisions:
According to Notification No: 102/2007-Customs, a trader is allowed refund of SAD (i.e. Additional Customs duty u/s 3(5) of Customs Tariff Act, 1975), however, there wasn’t any limitation period on refund of duty paid at the time of importing the goods.
RIGHT TO CLAIM: It arises only accrues to importer once sale is complete.
Post amendment made by Notification No: 93/2008-Customs, time period of one year from the date of payment of duty, was imposed, for applying for SAD refund.
Date of payment means: Chapter 3 Part V, clause 3.3 states that duty liability shall be deemed to discharged only when amount payable is credited to government account by TR-6 challan. In other words date of payment for calculation of limitation period must be considered as date of receipt of stamp on the TR-6 Challan.
Facts of the Case:
a. SONY INDIA PVT LTD imported some items in between 1-12-2007 and 5-12-2007 under 9 bills of entry, paid the applicable duties by demand drafts 2007, 18-12-2007 and 19-12-2007 and received stamped TR-6 challans on 14-12-2007, 18-12-2007 and 19-12-2007.
b. On 11-12-2008, appellant filed a refund claim amounting to Rs. 6667480 under the Notification No: 102/2007.After hearing the appellant, the respondent passed an order dated -12-10-2009 allowing the claim of Rs.3349015 & rejected the left amount on the ground that the refund in respect of 4 bills of entry had been filed beyond the period of 1 year stipulated in the amending notification.
Respondent reason behind rejection of refund:
a. The order in relevant part, reads that verification of TR-6 Challans against the bill of entry dated 11.12.2007 and 5.12.2007 reflect that the refund claim against the above bills are time barred as the date mentioned in TR-6 Challan was wrongly taken as the date of payment of duty by the appellant.
b. The claim filed by the appellant was not within one year from the date of duty as per circular 6/2008 and accordingly the refund claimed amount claimed under the said bills of entry was held to be liable to rejected.
Appellant reasons behind wrong rejection of fund:
1. The appellant sought to argue that there was no time limit in the original notification.
2. Period of one year should be reckoned from the date in the TR-6 challan, and the time of 1 year as applied by the respondent was bad in law.
3. The Board Circular no. 6/2008-cus dated 28.04.2008 clarifies that the time period of 6 months as under section 27 of customs act doesn’t automatically apply to SAD refund applications under the original notification.
Appellant Vs. Respondent:
The appellant submits that the respondent order was passed on the basis of the amending notification as the original notification neither stipulated a time period within which the refund was to be claimed, nor did it makes section 27 of Customs Act,1962 applicable to such claims.
Since imports & payments of relevant customs duties were made when the original notification was in force and the amending notification has no retrospective effect.
The appellant also argues that the CESTAT erred is not complying with its own decisions in UNITED CHEMICALS INDUSTRIES V. COM C. EX. KAMPUR,2013 (289) ELT 333, OM Households Appliances Pvt. ltd v. C.C (imports), Nhava Sheva ,[2012 (276) ELT 2591] and Audio Plus v.Com Customs (Imports) Raigad, [2011 (264) ELT 5161].
Pronouncement:
Hon'ble High Court held that no limitation period can be possibly be imposed for advancing a refund claim. This is because the right to claim refund only accrues to the importer once sale is complete. Given the vagaries of the market the importer has limited control over when sale is complete.
To uphold a limitation period starting from the date of payment of duty, as prescribed in the amending notification, would amount to allowing the commencement of a limitation period for refund claims before the right of refund has been accrued.
Henceforth, the refund provisions under the customs act are inapplicable to the duties levied under section 3(5) of CTA. Thus neither section 27 nor a notification under section 25(1), such as the amending notification no. 93/2008-cus dated 1.08.2008 can be used to impose a limitation period on right to claim refund of addition duty of customs paid under section 3(5).
Decision:
The imposition of a period of limitation for the first time, without statutory amendment, through a notification, couldn’t prevail.
For these reasons, the court held that the amending must be read down to the extent that it imposes a limitation period. Accordingly, the case was decided in favour of assessee.
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