The Customs, Excise, Service Tax Appellate Tribunal (CESTAT), Chandigarh Bench referred the issue of time limit prescribed for filing refund claim of SAD paid by the importer to the larger bench so as to consider relief to importer if goods are not sold within one year.
The appellant, M/s.Ambey Sales is engaged in the business of importing and selling plastic materials such as PVC resins during 2015-16 and paid the SAD in terms of section 3 (5) of Customs Act, 1962. They filed a refund claim under Notification No.102/2007- Cus dated September 14, 2007 of SAD. The said refund claims were rejected being time barred in terms of Notification No.93/2008-Cus dated August 1, 2008.
The appellant submitted that merely because two refund claims have been filed in the same month, the same cannot be rejected based on the Circulars issued by the Board.
The sole issue involved in this case was whether Notification No.102/2007-Cus dated September 14, 2007 as amended by Notification No.93/2008-Cus dated August 1, 2008, the time limit prescribed for filing refund claim is one year from the date of payment of SAD or not.
Notification No.93/2008-Cus prescribes that exemption from special CVD in specific is not available without VAT/Sales tax is paid by the importer. Further mandates notification is that SAD which has been levied on the importer is to safeguard the VAT/Sales tax is to be paid by the importer/trader at the time of sale of the goods.
Therefore, if the importer sells the goods and make payment of VAT/Sales tax then the importer is entitled to claim refund of SAD paid by them at the time of import of the goods. If the goods are not sold by the importer, the importer is not entitled for refund of SAD paid by him. The importer shall claim refund of such additional duty of customs paid on the imported goods with the jurisdictional Customs officer before expiry of one year from the date of payment of additional duty. Further, the importer shall pay proper Sales tax at the time of sale of imported goods.
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 duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible.
The coram of Ashok Jindal noted that when the said notification is beneficial to the assessee by exercising of power under section 25(1) of Customs Act, 1962, the whole purpose of the exemption granted under Sec. 25 (1) of the Act shall be defeated. In case, the imported goods could not be sold by the importer within one year of the payment of SAD on payment of VAT/service tax, the importer is deprived to claim the refund of SAD. The cause of action to claim refund of SAD does not arise as per Notification No.102/07-Cus dated September 14, 2007 and Notification No.93/08-Cus dated August 1, 2008.
The Tribunal further added that if the SAD and VAT/Sales tax paid on the imported goods, it will amount to double taxation on the said imported goods as condition 2(c) of the said notification bars the importer to file refund after clearance of goods after one year of the SAD. Once the intent of the Legislature is to refund the SAD on payment of VAT/Sales-Tax, the condition 2(c) of the Notification is against the intent of the Legislature. Asit is not the intent of legislature to tax double on the imported goods, the importer shall not compete Indian market.
The CESTAT while giving the example, if importer imported goods in March, 2020, after lockdown due to the Pandemic Covid 19 in all over country, second wave of Pandemic and various parts of India is under locked down, if the importer failed to sell the imported goods, the importer shall be put on another burden of SAD which is otherwise entitled of refund on payment of VAT/Sales tax. Further, unless and until the goods are sold on payment of VAT/Sales tax, cause of action for refund of SAD does not arise, the said issue has not been addressed by the Division of this Tribunal.
“In that circumstance, as there are contrary views of this Tribunal, then it would be in the interest of justice, the matter needs to be referred to the Larger Bench of this Tribunal,” the court said while directing the Registry to place the records before the President for the constitution of Larger Bench.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. We welcome your comments at info@taxscan.in
