Case Law Details
A.S. Chattha Exim Private Limited Vs Commissioner of Customs (Port) (CESTAT Kolkata)
The Customs Excise and Service Tax Appellate Tribunal (CESTAT) Kolkata recently adjudicated on the refund claims for Special Additional Duty (SAD) filed by A.S. Chattha Exim Private Limited against the Commissioner of Customs (Port). The core issue revolved around the interpretation of the time limit for filing refund applications under relevant notifications.
Detailed Analysis:
The appellant, represented by Shri S. Chatterjee, argued that the one-year time limit for filing refund applications should start from the date of sale of goods, citing precedent in Dow Chemical International Pvt. Ltd. vs. Commissioner of Customs, Kandla. Conversely, the Revenue’s representative referred to the precedent set in M/s. Abhishek Marketing vs. Commissioner of Customs (Port), Kolkata, which emphasized that the time limit begins from the date of payment of additional customs duty.
Upon hearing both sides and examining the appeal documents, the tribunal noted a consistent legal stance in similar cases. Notably, in the case of M/s. Abhishek Marketing, the tribunal had previously ruled that the time limit for filing refund claims commences from the date of payment of additional customs duty, as specified in the notifications.
Further, the tribunal referred to various judicial decisions, including the Chennai Tribunal’s ruling in Tranasia Bio-Medicals Ltd. vs. Commissioner of Customs (SEA), which upheld the strict adherence to the conditions outlined in the notification. This included filing refund claims within one year from the date of payment of the additional duty, as stipulated under Notification No. 102/2007-Cus., as amended by Notification No. 93/2008-Cus.
After extensive deliberation and citing legal precedents, the tribunal upheld the rejection of A.S. Chattha Exim Pvt. Ltd.’s refund claims for SAD on imported goods.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The present appeals have been filed by the appellant against Order-in-Appeal Nos. KOL/CUS(PORT)/AA/1887-1888/20 18 dated 22.10.2018 passed by the Commissioner of Customs (Appeals), 3rd Floor, Custom House, 15/1, Strand Road, Kolkata – 700 001.
2. Shri S. Chatterjee, Ld. Counsel appearing on behalf of the appellant, submits that the issue involved in the present appeals is the refund of Special Additional Duty (SAD). He submits that the time-limit of one year prescribed for filing the refund application should start from the date of sale of the goods. In support of his argument, he cited the decision of the Tribunal in the case of Dow Chemical International Pvt. Ltd. v. Commissioner of Customs, Kandla [2024 (387) E.L.T. 621 (Tri. – Ahmd.)]. Accordingly, he requested to allow their appeals.
3. The Ld. Authorized Representative appearing for the Revenue submits that this Bench has decided this matter in the case of M/s. Abhishek Marketing v. Commissioner of Customs (Port), Kolkata [Final Order 75572 of 2024 dated 20.03.2024 in Customs Appeal No. 79748 of 2018 – CESTAT, Kolkata] wherein the Tribunal has held that the one-year period for filing the refund claim should start from the date of payment of additional customs duty. Accordingly, he prayed for rejecting the appeals filed by the appellant.
4. Heard both sides and perused the appeal documents.
5. I find that on an identical set of facts, this Tribunal in the case of M/s. Abhishek Marketing (supra) has analysed a similar issue, wherein it has been categorically observed as under: –
“8. The period in the Sony India case was December 2007, that is prior to the amendment carried out vide Notification No. 93/2008-Cus dated 01.08.2008. The Delhi High Court has followed the Sony India judgement in the Gulati Sales Corporation case wherein again the period of import was September, 2007 to January, 2008 [201 7(352)E.L.T. 360 (Tri.Del.)]. On the other hand, in the present case the period involved is December, 2015 to April, 2016.
9. The Chennai Tribunal in the case of Tranasia Bio Medicals Ltd., Vs. Commissioner of Customs (SEA), 2021 (376) E.L.T. 381 (Tri. -Chennai), has held as under:-
“Heard both sides and perused the records. The appellants herein had imported goods and paid Special Additional Duty @ 4% as applicable to the goods. In terms of Notification No. 102/2007-Cus., dated 14-9-2007 read with Notification No. 93/2008, dated 1-8-2008, the assessees are entitled to refund of Special Additional Duty (SAD) paid if the imported goods are thereafter sold by them on payment of VAT subject to the conditions mentioned in the notification. One of the conditions mentioned in the notification as applicable during the relevant time was that the refund claim must be filed within one year. The appellant filed the refund claim after the period of one year and it was rejected by the lower 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. 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 Ld. DR relies on the judgment of Hon’ble High Court of Bombay with respect to SAD refunds in W.P. No. 388 of 2016 in the case of CMS Info Systems Ltd. v. Union of India – 2017 (349) E.L.T. 236 (Bom.) in which the Hon’ble High Court of Bombay has held that the importer has no vested right of refund and it flows only from the exemption notification and therefore all conditions of the exemption notification apply. Hence a refund claim filed after the period of one year is not admissible.
[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 applicable, at the time of importation of the goods;
(b) the importer, while issuing the invoice for sale of the said goods, shall specifically indicate in the invoice that in respect of the goods covered therein, no credit of the additional duly of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible;
(c) the importer shall file a claim for refund of the said additional duty of customs paid on the imported goods with the jurisdictional customs officer before the expiry of one year from the date of payment of the said additional duty of customs;
(d) the importer shall pay on sale of the said goods, appropriate sales tax or value added tax, as the case may be;
(e) the importer shall, inter alia, provide copies of the following documents along with the refund claim :
⇒ (i) document evidencing payment of the said additional duty;
⇒ (ii) invoices of sale of the imported goods in respect of which refund of the said additional duty is claimed;
⇒ (iii) documents evidencing payment of appropriate sales tax or value added tax, as the case may be, by the importer, on sale of such imported goods.
3. The jurisdictional customs officer shall sanction the refund on satisfying himself that the conditions referred to in para 2 above, are fulfilled.
[Notification No. 102/2007-Cus., dated 14-9-2007 as amended by Notification No. 93/2008-Cus, dated 1 -8-2008]”
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 Court of Delhi and differed from it. The Hon’ble High Court of Bombay observed that in terms of Section 3(5) of the Customs Tariff Act, the provisions of Customs Act and the rules and mechanisms for refund apply to any claim of refund of SAD. Therefore, Section 27 of the Customs Act, 1962 including the time limit of one year applies. Further, the amended notification has also introduced a limitation for seeking refund. The Hon’ble Bombay High Court also held that this is an exemption granted and it is conditional. The exemption being conditional, it is not permissible to pick and choose the convenient conditions of the exemption notification and leave out those which are onerous and excessive. The Hon’ble High Court further held that but for the exemption notification, there is no right of refund vested with the importer.
11. In view of the above legal position and factual matrix, Ld. Counsel for the appellants submits that the position of law enunciated by the Hon’ble High Court of Delhi in the case of Sony India Pvt. Ltd. (supra) is correct and proper and must be applied 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 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’ble High Court of Delhi, in terms of Section 3(5) of the Customs Tariff Act, 1975 all provisions of Customs Act will apply including provisions of refund under Section 27. Therefore, no refund can be sanctioned beyond the period of one year. Lastly, he argued that the entire question is one of interpretation and application of the exemption notification with respect to the imported goods. In this particular exemption notification, the exemption is made available by way of refund after ensuring that the required conditions are met. Hence it is one of interpreting the exemption notification. The Hon’ble High Court of Delhi has taken a more liberal, purposive interpretation of the exemption notification and held that its benefit cannot be denied simply because the importer is not able to complete his subsequent sale and avail the exemption notification within the time period prescribed. On the other hand, the Hon’ble High Court of Bombay has constructed the exemption notification strictly and held that a conditional exemption notification must be viewed along with all the conditions therein and it is not open for the importer to pick and choose which conditions they would fulfil and which they would not. So the root of the case is one of interpretation of an exemption notification.
13. He fairly submits that there are a number of decisions by various judicial fora including the Hon’ble Apex Court taking both liberal and strict interpretations of the exemption notifications. In view of the conflicting judgments, the matter was referred to a Five-Judge Constitutional Bench of the Supreme Court in the case of Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company reported in 2018 (361) E.L.T. 577 (S.C.). Paras 52 & 53 of the this judgment were as follows:
“52. To sum up, we answer the reference holding as under –
(1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification.
(2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue.
(3) the ratio in Sun Export case (supra) is 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.”
15. We have considered the arguments on both sides and perused the records. The provisions for refund of Customs duty available under the Customs Act are under Section 27. The Hon’ble High Court of Delhi in the case of Sony India Pvt. Ltd. (supra) held that this section should not apply to refund of SAD because this refund is available as per the notification. The Hon’ble High Court of Delhi was dealing with a situation where there was no limitation in the exemption notifications for filing the refund claim at the time of import but which was introduced by the time refund claim was filed. The Hon’ble High Court of Bombay, on the other hand, was dealing with a case such as the present one, where the imports have taken place after the amendment to the notification. The Hon’ble High Court of Bombay also held that the limitation under Section 27 also applies. We find that the Hon’ble High Court of Delhi framed the question of law only with respect to retrospective application of the amendment but also held that the amending notification must be read down to the extent it imposes a time limit for filing the refund claim. Evidently, if an importer resells the goods and files the refund claim within the period, they will be put to loss as he will be bearing both the burden of SAD and the VAT which he would pay while selling the goods. The Hon’ble High Court of Bombay on the other hand held that it is not open for the importer to pick and choose parts of the exemption notification that suits while ignoring those that don’t. The Hon’ble High Court of Bombay also held that Special Additional Duty of Customs is also in the nature of customs duty and it is not a duty on sale of goods. It further held that the importer does not have any vested, let alone absolute right, for refund of the SAD. We also note that the Hon’ble High Court of Bombay has considered the judgment of the Hon’ble Delhi High Court in the case of Sony India Pvt. Ltd. (supra) and differed from it. Further, in the case of Gulati Sales Corporation [2018 (360) E.L.T. 277 (Del.)] decided by the Hon’ble High Court of Delhi on 7-11-2017, the ratio of Sony India (supra) was followed even though the imports were made after amendment to the notification. Nevertheless, the undisputed position 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 now finally been settled by the judgment of the Constitutional Bench of the Hon’ble Apex Court on 30th July, 2018 in the case of Dilip Kumar & Company (supra), any exemption notification must be strictly interpreted and any benefit of doubt must go in favour of the Revenue and against the assessee. Contrary decisions such as those in the case of Sun Export Corporation v. Collector [1997 (93) E.L.T. 641 (S.C.)] have been overruled by the aforesaid Five-Judge Constitutional Bench. Judicial discipline requires us to follow the judgment of the Apex Court and interpret the exemption notification strictly as it has been drafted including the time limit within which refund applications have to be filed. We find that the judgment of the Hon’ble High Court of Bombay in the case of CMS Info System (supra) is consistent with the ratio of Dilip Kumar’s case (supra), which is required to be followed.
17. Consequently, the refund application of the importer beyond the time limit has been correctly rejected by the lower authorities. The impugned order rejecting such refund claim is correct in law and call for no interference. The appeal is rejected and the impugned order is upheld. [Emphasis supplied]
10. In the case of M.S. Metals, Vs. Commissioner of Customs (Prev.), Patna, reported in 2017 (345) E. L. T. 113 (Tri. -Kolkata), this tribunal has held as under:
“8. As per ‘Clause (c)’ of Notification No. 102/2007-Cus., dated 14-9-2007, as substituted by Notification No. 93/2008-Cus., dated 1-8-2008, refund claim of additional duty of customs paid on imported goods with the jurisdictional customs officer is required to be filed within one year from the date of payment of said additional duty of customs. In the present appeal the dispute is from 25-3-2011 to 18-9-2012 which is after 1-8-2008 when Notification No. 93/2008-Cus., dated 1-8- 2008 was issued and operative in the original Notification No. 102/2007-Cus., dated 14-9-2007. It has not been disputed by the appellant that their refund claim were filed after one year as prescribed in the notification. Accordingly, there is no substance in the appeal filed by the appellant and the same is dismissed by upholding the OIA dated 18-2-2014 passed by the First Appellate Authority.“
[Emphasis Supplied]
11. After going through the case laws cited by both sides. I observe that the Delhi High Court judgments are in respect of refund claims filed prior to the amendment carried out vide Notification No. 93/2008-Cus dated 8.2008. On the other hand, in the case of Trans BioMetal case cited supra the period involved is December 2015 to April, 2016. Further, in this case the Tribunal has extensively cited the order of the Hon’ble Bombay High Court in the case of CMS Info Systems Ltd., Vs. UOI2017(349) E.L.T. 236 (Bom.). The Tribunal has also considered the judgment of Hon’ble Supreme Court in the case of Commissioner of Customs (Imports), Mumbai Vs. Dilip Kumar-2018(361) E.L. T. 577 (S.C.), wherein it has been held that if the assessee wishes to avail any exemption Notification, all the conditions set therein have to be fully complied with. In the present case, both the Bombay High Court judgment and Supreme Court judgment in the case of Dilip Kumar would be squarely applicable. If the appellant wishes to claim the refund of CVD, he is required to fulfill the condition of filing the refund claim within one year which is a mandatory condition under Notification No. 93/2008-Cus.
12. Therefore, following the ratio of Tranasia Bio Medicals Ltd. Case law, I dismiss the appeal filed by the Appellant.”
6. In view of the above discussions, I am of the view that the ratio laid down in the above case is squarely applicable to the factual matrix of the present appeals. I observe that the judgements of the Hon’ble Delhi High Court cited by the appellant pertain to refund claims filed prior to the amendment carried out vide Notification No. 93/2008-Cus. dated 01.08.2008. Thus, I find that the decisions cited by the appellant are not relevant in the facts and circumstances of the present case.
7. Accordingly, I do not see any reasons for interfering with the impugned orders and the same are accordingly upheld.
8. In the result, the appeals filed by the appellant stand dismissed.
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