Rejection of Refund of amount paid through DEPB Scrip is not valid in Absence of Evidence: CESTAT [Read Order]

The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the rejection of refund of the amount paid through DEPB scrip is not valid in absence of evidence.

Shri Anjali Hirawat Advocate appeared for the Appellant and Shri Ram Kumar Authorised Representative appeared for the Respondent.

Virgo Suitings Pvt Ltd, the appellant challenged the order dated 10.10.2018 passed by the Commissioner of Customs, Mumbai by which the Commissioner rejected the appeals filed by the appellant. The issue was to determine whether the appellant is entitled to refund additional duty of Customs (SAD) paid through DEPB scrip/license.

The appellant filed refund claims on 04/02/2016 and 04/04/2016 for Rs.6,75,155/- and Rs.13,78,961/- respectively of SAD paid u/s. 3(5) of Customs Tariff Act, 1975 in terms of Notification no. 102/2007-CUS dated 14/09/2007 as amended by Notification No. 93/2008. SAD refund of Rs.6,75,155/- is concerned, out of this amount Rs., 4,48,989/- was paid in cash whereas, the remaining amount of Rs.2,26,166/- was Debited from the relevant DEPB License. In the second refund, a claim out of the amount of Rs. 13,38,961/- an amount of Rs.8,94,587/- was paid in cash and the remaining amount of Rs.4,44,374/- was debited from the relevant DEPB License.

The Adjudicating Authority vide two separate Orders-inOriginal sanctioned the refund of duty which was paid in cash and rejected the refund claims in respect of the duty which was debited from the DEPB License. On appeal, the Commissioner (Appeals) upheld the Adjudicating orders and rejected the appeals filed by the appellant.

It was evident that the SAD refund claims have been rejected by the Authorities below only on the ground that the duty was paid through a debit from the relevant DEPB License. It was stated by the appellant that he has satisfied all the conditions mentioned in Notification No. 102/2007-CUS dated 14/09/2007 as amended by Notification No. 93/2008-CUS dated 01/08/2008 wherein exemption has been provided from payment of the SAD amount on the imported goods when those are subsequently sold in India and that the exemption benefit provided under these Notifications is subject to fulfilment of the condition.

 The said conditions nowhere prohibit the refund when the duty amount was paid through DEPB scrips. Per contra Learned Authorised Representative appearing on behalf of Revenue drew my attention to the public notice dated 18/04/2013 issued by DGFT which provided that if SAD was paid by the utilizing duty credit scrip after 30/09/2013 such payment cannot be considered as proper payment of Customs Duty as time limit fixed for utilizing the credit of 4% SAD was only till 30/09/2013.

It was observed that the Revenue has failed to establish through any kind of documents or case laws that debit of any amount under the DEPB scheme is not a mode of payment of duty, therefore the benefit cannot be denied to the appellant.

While allowing the appeal, the Coram of Mr Ajay Sharma, Member (Judicial) held that in the absence of justification for rejecting the refund claim in respect of the duty which was paid through DEPB scrip, the impugned order cannot sustain.

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