In a recent judgement, the Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that the denial of the Claim of 4 % Special Additional Duty ( SAD ) refund alleging trivial procedural requirement is invalid and allowed the refund. The Tribunal viewed that the benefits under Notification No.102/2007 – Customs should not be denied to the Appellant thereby the Appellant is entitled to refund the claim.
The Appellant, M/s Hamilton Houseware Pvt. Ltd is engaged in importing goods on payment of appropriate Countervailing Duties (CVD) and 4% Special Additional Duty (SAD). The said imported goods are then sold by the Appellants in the domestic market whereupon payment of appropriate sales tax/ VAT. The amount of 4% SAD so paid on the goods at the time of import, qualifies for refund under conditions as specified under Notification No.102/2007 – Cus dated 14.09.2007.
The Appellants have paid the import duties through DEPB Script to the tune of Rs. 58,779/-and Rs. 3,25,932/- in cash. The appeal in the present case revolves around the claim of refund of 4% SAD paid in cash as the same being denied by the Department on the grounds that such claim is erroneous in so far as two refund applications have been filed in the financial year for the same Bill of Entries under Notification No.102/2007 – Customs.
Shri Vinay Sejpal, Advocate appearing on behalf of the Appellant submitted that there is no dispute on the fact that the Appellant has paid 4% SAD on the import of goods under four Bills of Entries; that the said goods have been sold in the domestic market on payment of appropriate sales tax/VAT; that the Appellants have fulfilled all requirements and conditions as enlisted under Notification No.102/2007 – Customs; and that the Appellant have filed for two separate refund applications.
It was argued that the adjudicating authority has failed to appreciate that the OIO dated 06.06.2014 was the implementation of the directives of the OIA dated 11.04.2014 read with corrigendum dated 25.04.2014 and without challenging any of the above orders the refund so granted should not be considered as erroneous.
Shri A.R. Kanani, Superintendent (AR) appearing on behalf of the Department has reiterated the findings of the impugned order. The Department has applied the said condition stating that the Appellant has filed two separate claims on the same Bills of Entry. It has to be noted that under the given circumstances the application of the procedural requirement seems trivial to the purposes of the said issue as in the present case the payment of 4% SAD was done through two mediums by DEPB Script and Cash which was the sole reason behind the Appellant filing two claims.
The conditions under the said circular act as a procedural safeguard that can be differentiated based on the facts and circumstances of a case. It would be contrary to the essence of the circular to deny the substantial benefit of refund only on a procedural requirement when it is silent towards such issues as that in the case of the Appellant. The scope of benefit entailed under a Notification cannot be curtailed solely based on the claims as made in the present case. It would render the effectiveness of a Notification redundant when all other essential conditions required for the said purposes have been adhered with which in the present case has been complied with by the Appellant.
It was a settled law that the notification had to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. The rule regarding exemptions is that exemptions should generally be strictly interpreted but beneficial exemptions having their purpose as encouragement or promotion of certain activities should be liberally interpreted.
It was observed that even if more than one claim in a month is filed the same can not be denied only because of the reason that the circular prescribed only one refund claim in a month otherwise statutory time limit of one year provided in the notification will become redundant.
The Tribunal in the case of B.S.L. Ltd. Versus Commissioner of C.Ex., Jaipur has held that the refund under Rule 5 is permissible despite the claim having been the second time in a month which is a violation of condition of 11/2002-C.E. (N.T.) dated 1/3/2002. In my view, this was held keeping in mind that though there is a procedure to file one
A two-member bench comprising Mr Ramesh Nair, Member (Judicial) and Mr Raju, Member (Technical) viewed that the benefits under Notification No.102/2007 – Customs should not be denied to the Appellant thereby the Appellant is entitled to refund claim.
While allowing the appeal, the CESTAT set aside the impugned order.
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