Relief for Castrol India: CESTAT Rules SAD Refund Cannot Be Denied Solely Due to Brand Name Change When Product Is Identical [Read Order]

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that a Special Additional Duty (SAD) refund under Notification No. 102/2007-Cus cannot be denied merely because the product was sold under a different brand name, as long as the imported and sold goods are materially the same.

Castrol India Ltd., the appellant, is engaged in the manufacture and sale of lubricating oils and related products. The company imported a product called “Long Life Coolant” and cleared it under Customs Tariff Heading 3820 00 00, paying SAD at the time of import.

Stay Updated with the Latest Audit Report Formats & Audit Trials Requirements! Click here 

The product was later sold in India under the trade name “Castrol Radicool,” and the appellant claimed refunds of SAD paid at import under the applicable notification for the period from July 2009 to March 2011.

The department initially sanctioned the refund claims but later issued a show cause notice seeking recovery of the refunded amounts. The department argued that the appellant had sold the goods under a different name from what was declared at the time of import, thereby breaching the refund conditions.

It treated the variation in name as a misrepresentation and invoked Section 28(1) of the Customs Act, 1962 to demand repayment of the refund, along with interest and penalty. The Commissioner (Appeals) upheld the demand, and Castrol India appealed to the Tribunal.

The appellant's counsel argued that the product imported and the product sold were chemically and physically the same. They explained that the name “Castrol Radicool” was merely a marketing label and did not alter the nature or identity of the product, which remained “Long Life Coolant.”

The counsel submitted sales invoices, VAT payment documents, and other records to show that the imported goods were sold in the same form. They argued that there was no suppression of facts, misstatement, or intention to mislead the authorities, and therefore the invocation of the extended period under Section 28(1) and the imposition of a penalty were unjustified.

The revenue counsel argued that the goods sold under the name “Castrol Radicool” were not the same as “Long Life Coolant” as declared at the time of import. They argued that this difference constituted a misrepresentation, which invalidated the refund and triggered the provisions for recovery and penalty.

The two-member bench comprising P. Dinesha (Judicial Member) and K. Anpazhakan (Technical Member) observed that the product remained the same in substance and that the name change was only for marketing purposes. It observed that the refund claim was supported by documentary evidence, including invoices and VAT records, which showed that the imported goods were sold without any modification.

The tribunal explained that a change in trade name does not affect refund eligibility under the notification if the goods are sold in the same condition as imported. It held that the department’s action of treating the name difference as misrepresentation was incorrect. The substantive conditions of the notification were fulfilled, so the appellant was entitled to the refund. The tribunal allowed the appeal.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates