Gujarat High Court
The Commissioner Of Customs , Kandla vs Dow Chemical International Pvt Ltd on 19 June, 2026
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/TAXAP/867/2024 ORDER DATED: 19/06/2026
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 867 of 2024
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THE COMMISSIONER OF CUSTOMS , KANDLA
Versus
DOW CHEMICAL INTERNATIONAL PVT LTD
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Appearance:
DEEPAK N KHANCHANDANI(7781) for the Appellant(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 19/06/2026
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned Senior Standing Counsel Mr. Deepak
Khanchandani for the appellant.
2. This appeal is filed under Section 130 of the Customs
Act, 1962 (for short ‘the Act’) on the following proposed
questions of law arising out of the order dated 8.11.2023
passed by the Customs Excise and Service Tax Appellate
Tribunal, West Zonal Bench at Ahmedabad (for short “the
CESTAT”) in Customs Appeal No. 11442 of 2017-DB.
3. The proposed questions of law are as under:
“(i) Whether in the facts and circumstances of the case,
the Hon’ble Tribunal was legally correct in observing
that the Respondent’s refund claim is not time barred as
the same was filed while within 1 year from the date of
sale of the goods, thus deviating from the condition ofPage 1 of 20
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the Notification in respect of limitation of one year from
the date of payment of customs duty?
(ii) Whether Hon’ble Tribunal was correct in observing
that decision of Hon’ble High Court of Delhi in the case
of Sony India Pvt. Ltd. will prevail over the judgment of
Hon’ble High Court of Mumbai in case of CMS Info
System, though the Constitutional Bench of the Hon’ble
Apex Court in judgment dated 30.07.2018 in the case of
Dilip Kumar & Company held that the exemption
notification should be interpreted strictly?”
4. The brief facts of the case are as under:
4.1 The assessee has filed refund claim of Rs.71,22,016/- on
1.1.2016 in respect of 4% (Special Additional Duty (SAD) paid
by it on import. On scrutiny of the documents, it was found by
the department that bills of entry against which the claim was
made, appeared as time barred as per provision of Section 27
of the Act.
4.2 By letter dated 21.1.2016, it was informed to the
assessee that the refund claim is time barred, however, such
rejection was opposed by the assessee and the case was
adjudicated by passing the Order-in-Original dated 10.5.2016
and refund claim was rejected by the adjudicating authority.
5. Being aggrieved, the assessee preferred appeal before
the Commissioner of Customs (Appeals) who by order datedPage 2 of 20
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17.4.2017, dismissed the appeal of the assessee on the ground
that the adjudicating authority has rightly rejected the refund
claim of the assessee in view of the provision of Section 27 of
the Act read with Notification No. 102/2007 -Cus dated
14.09.2007 and Circular No. 93/2008-Customs dated 1.8.2008
read with Circular No. 6/2008-Customs dated 28.04.2008.
5.1 The Commissioner (Appeals) referred to and relied upon
the decision of the Hon’ble Bombay High Court dated
19.12.2016 in case of M/s. CMS Info Systems Ltd. v/s.
Union of India, reported in [2017-TIOL-79-HC-MUM-
CUS] wherein the Hon’ble Bombay High Court after
considering the decision of Hon’ble Delhi High Court in case
of Sony India Pvt. Ltd V/s. Commissioner of Customs,
New Delhi reported in 2014 (304) ELT 660 (Del) has
arrived at a different conclusion on the ground that the
condition in the notification which is in the nature of
limitation cannot be held to be onerous, excessive and,
therefore, has taken a contrary view to that of the Hon’ble
Delhi High Court.
6. Being aggrieved, the assessee preferred an appeal
before the CESTAT. The CESTAT, after considering the
provision of Section 27 of the Act read with Notification No.
102/2007 Customs dated 14.09.2007 and Notification No.
93/2008 Customs dated 01.08.2008, allowed the appeal as per
the following observations:
“4. On careful consideration of the submissions made by both
the sides and perusal of record. We find that the limited Issue
to be decided in the present case is whether the 1 yearPage 3 of 20
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limitation should apply for granting the refund of 4 % SAD
from the date of payment of customs duty or from the date of
sale of goods and payment of VAT. We find that in order to
grant the refund of 4% SAD an assessee is required to submit
the sales invoices and proof of payment of VAT/ Sales Tax. In
this position, if the goods is not sold then the assessee cannot
filed a refund claim, and even, if it is filed as a precautionary,
measure the department will not entertain such refund claim,
for the reason that there will be neither sale invoice nor
payment of VAT. Considering this position the Delhi High
Court in the case of Sony India, held that the period of
limitation of 1 year from the date of payment of duty shall not
apply, whereas 1 year shall apply from the date of sale of the
goods. The judgment of Delhi High Court has been upheld by
the Hon’ble Supreme Court. It is further observed that the
Hon’ble Supreme Court has upheld the judgment in the case
of M/s. Bhimeshwari Overseas and Nanak Electronics Pvt Ltd
passed by the Hon’ble Delhi High Court. Therefore, the view
taken by the Delhi High Court was affirmed by the Hon’ble
Supreme Court in the various judgments cited (supra). As
regard the reliance placed by the revenue in the case of CMS
Info System. Ltd, we find that with due respect though the
Hon’ble Bombay High Court expressed the view that one year
limitation shall apply from the date of payment of custom
duty, however in the light of the consistent view taken by the
Delhi High Court and upholding the same by the Hon’ble
Supreme Court the judgment of Delhi High Court will
prevail.”
7. Learned Senior Standing Counsel Mr. Deepak
Khanchandani submitted that it is true that the Hon’ble Delhi
High Court has struck down the time limit of one year
prescribed by the Notification No. 93/2008 dated 01.08.2008
and the Hon’ble Supreme Court had dismissed the Special
Leave Petition (SLP) filed by the Department, however, the
question of law was kept open while dismissing the SLP.
8. It was further submitted SLP challenging the decision of
the Bombay High Court is pending before the Hon’ble
Supreme Court and, therefore, this matter is required to be
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kept alive by admitting the substantial questions of law
proposed by the revenue.
9. On perusal of the facts of the case, it appears that the
same are similar to that before the Hon’ble Delhi High Court
in the case of Sony India Pvt. Ltd (supra). The Delhi High
Court after considering the provision of Section 27 of the Act
read with Section 3(5) of the Customs Tariff Act, 1975 and the
Notification No. 102/07(5)(8) and Notification No. 107/2007
and 93/2008, held as under:
“8. To understand the nature of duty, it would be
appropriate to extract Section 3(5) of the CTA:
“(5) If the Central Government is satisfied that it is
necessary in the public interest to levy on any imported
article [whether on such article duty is leviable under sub-
section (1) or, as the case may be, sub-section (3) or not] such
additional duty as would counter-balance the sales tax, value
added tax, local tax or any other charges for the time being
leviable on a like article on its sale, purchase or
transportation in India, it may, by notification in the Official
Gazette, direct that such imported article shall, in addition,
be liable to an additional duty at a CUSAA 3/2014 Page 5 rate
not exceeding four per cent of the value of the imported
article as specified in that notification.
Explanation.–In this sub-section, the expression “sales
tax, value added tax, local tax or any other charges for the
time being leviable on a like article on its sale, purchase or
transportation in India” means the sales tax, value added tax,
local tax or other charges for the time being in force, which
would be leviable on a like article if sold, purchased or
transported in India or, if a like article is not so sold,
purchased or transported, which would be leviable on the
class or description of articles to which the imported article
belongs, and where such taxes, or, as the case may be, such
charges are leviable at different rates, the highest such tax
or, as the case may be, such charge.” (emphasis supplied)
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9. This provision indicates that this duty, while enacted into
force in a legislation that sought to consolidate the “law
relating to customs duties”, is a duty in the nature of
sales/VAT. The intent of such duties seeking to counter-
balance the sales/VAT etc. leviable on like goods sold in India
is to counter balance the duties borne by like goods produced
indigenously in India, as its Statement of Objects and
Reasons would indicate. The exemption provided in the
original notification issued in exercise of the power under
Section 25(1) of the Customs Act is conditional upon
subsequent sale, as can be seen from the conditions required
to be fulfilled in order for an importer to avail the benefit of
this exemption:
“(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 duty
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;
(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.”
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10. That the importer is required to produce invoices of sale,
documents evidencing payment of sales tax/VAT etc. clearly
indicates that the benefit of this notification can be availed
only once sale of the imported goods is complete. The
exemption is clear in its intent to allow a refund of the SADC
paid under Section 3(5) of the CTA because the importer has
suffered the incidence of SADC (meant to counter-balance
sales tax/VAT leviable on a like article in India) on import,
and then of actual sales/VAT on sale of these imported goods.
In this light, it is necessary to examine the applicability of any
limitation period, whether under the amending notification or
under Section 27 of the Customs Act.
11. Section 3(8) of the CTA states:
“(8) The provisions of the Customs Act, 1962(52 of
1962) and the rules and regulations made thereunder,
including those relating to drawbacks, refunds and
exemption from duties shall, so far as may be, apply to
the duty chargeable under this section as they apply in
relation to the duties leviable under that Act.”
12. The provisions of the Customs Act on the rules and
mechanism for refund is incorporated by reference into the
CTA only “so far as may be” applicable Since SADC levied
under Section 3(5) is refundable only on subsequent sale (i.e.
the point at which sales tax/VAT liability arises), it is the
opinion of this Court that no limitation period can possibly be
imposed for advancing a refund claim. This is because the
right to claim refund only accrues to the importer once sale,
an entirely market driven event, is complete. Given the
vagaries of the market, the importer has limited control over
when the sale is complete. To uphold a limitation period
starting from the date of payment of duty, as prescribed in
the amending notification, would amount to allowing the
commencement of a limitation period for refund claims
before the right of refund has even accrued. To this extent,
this Court is of the opinion that the refund provisions under
the Customs Act are inapplicable to the duties levied under
Section 3(5) of the CTA. Thus, neither Section 27 nor a
notification under Section 25(1), such as the amending
notification no. 93/2008-Cus dated 1.08.2008 can be used to
impose a limitation period on the right to claim refund of
additional duty of customs paid under Section 3(5). If a
limitation period is sought to be imposed in respect of refund
claims in a case where the importer advances a refund of
SADC paid owing to having incurred sales tax/VAT liability on
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subsequent sale of goods, it must be introduced by
legislation, given the expropriatory consequences of such a
limitation period.
13. Customs duties, properly so charged, are those which
every importer knows to be leviable on the importation of
goods, of course subject to any exemption which may be
provided. The regime under which customs duty can be
recovered concers known events and details. Several
contingencies with respect to rate of duty, removal of goods,
their warehousing, etc are envisioned in the scheme of the
Customs Act. However, in the case of SADC, which is a levy
meant to offset any advantage, there is inherent a right to
refund, once the importer shows that the goods have been
sold or the other taxation incident, i.e. payment of VAT
occurs. This duty was imposed as India’s response to offset
any advantage that importers might secure, by way of a non-
discriminatory levy, by importation of goods at cost or prices
lower than what could be obtained by domestic
manufacturers. A discriminatory tax could not have been
levied, given India’s obligations as a participant in the WTO
and having regard to its treaty obligations.
14. The expression “so far as may be” in this context, under
Section 27 is significant as well as instructive. The levy under
Section 3 (5) is conditional upon the Central Government’s
opinion that it is necessary to “counter-balance the sales tax,
value added tax, local tax or any other charges for the time
being leviable on a like article..”; the rate of duty – where
more than one levy exists, would be the highest of such rates
and the terms of imposition of SADC would be spelt out in the
notification. In this case, the regime existing before the
notification of 2008 did not specify any period of limitation –
and perhaps advisedly so. Some customs authorities
apparently started applying Section 27, drawing inspiration
from Section 3(8) which led to confusion. In Notification
No.102/2007-Customs dated 14.09.2007 there was no period
of limitation; by Circular No.6/2008-Customs, an amending
notification providing for one year period from the date of
payment of the additional duty of customs was issued,
through Notification No.93/2008-Customs dated 1.8.2008,
amending Para 2(c) of the 2007 Notification. The net effect of
these was that a one year period was insisted upon for refund
applications. That period was calculable from date of
payment of duty (SAD). Dr Partap Singh & Anr v. Director of
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Enforcement, Foreign Exchange Regulation Act & Ors., 1985
(3) SCC 72 is an authority for the proposition that the use of
the phrase “so far as may be” in a later statute, with
reference to provisions in an earlier statute, means that the
provisions of the referred (earlier) statue are to be followed
“to the extent possible”. The Supreme Court, in that case
turned down the argument that the letter and content of
Section 165 of the Code of Criminal Procedure was to be
followed in Foreign Exchange Regulation Act proceedings, by
virtue of Section 37 (2) of that Act. It was held, crucially that:
“The submission that Section 165(1) has been
incorporated by pen and ink in Section 37(2) has to be
negatived in view of the positive language employed in
the section that the provisions relating to searches shall
so far as may be apply to searches under Section 37(1).
If Section 165(1) was to be incorporated by pen and ink
as Sub-section (2) of Section 37, the legislative
draftsmanship will leave no room for doubt by
providing that the provisions of the CrPC relating to
searches shall apply to the searches directed or
ordered under Section 37(1) except that the power will
be exercised by the Director of Enforcement or other
officer exercising his power and he will be substituted
in place of the Magistrate. The provisions of Sub-
section (2) of Section 37 has not been cast in any such
language. It merely provides that the search may he
carried out according to the method prescribed in
Section 165(1).”
16. Section 27 (1) of the Customs Act prescribes a time limit
of expiry of “one year, from the date of payment of such duty
or interest…”. Section 27 (1B) lists out three contingencies
when the one year limit applies with modified effect. That
provision has the effect of shifting the date from which the
refund claim is to be reckoned. All that can be inferred from
the term “so far as may be” would be that specific provisions
relating to the mechanism applicable for refund, in the
Customs Act, applied; not the period of limitation. The
Customs authorities had never understood Section 27(1) as to
mean that a one year period of limitation was applicable.
Audioplus (supra) and United Chemicals Industries (supra)
are both testimony to this. It is the circulars/notifications of
2008 and No. 16/2009 which for the first time harped on the
one year period of limitation. Circular No 6/2008 dated
28.4.2008 issued by the CBEC stated that:
“4. Time-Limit:
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“4.1 In the Notification No. 102/2007- Customs, dated
14-9-2007, no specific time – limit has been prescribed
for filing a refund application. Under the
circumstances, a doubt has been expressed that
whether the normal time-limit of six months prescribed
in Section 27 of the Customs Act, would apply. In the
absence of specific provision of Section 27 being made
applicable in the said notification, the time-limit
prescribed in this section would not be automatically
applicable to refunds under the notification. Further, it
was also represented that the goods imported may have
to be dispatched for sale to different parts of the
country and that the importer may find it difficult to
dispose of the imported goods and complete the
requisite documentation within the normal period of six
months. Taking into account various factors, it has been
decided to permit importers to file claims under the
above exemption upto a period of one year from the
date of payment of duty. Necessary change in the
notification is being made so as to incorporate a
specific provision prescribing maximum time-limit of
one year from the date of payment of duty, within
which the refund could be filed by any person. It is also
clarified that the importers would be entitled to refund
of duties only in respect of quantities for which the
prescribed documents are made available and the
claims submitted within the maximum prescribed time
of one year. Unsold stocks would not be eligible for
refunds.”
Notification No 93/2008 dated 01.8.2008 was issued
prescribing the period of limitation as one year from the date
of payment of additional duty of Customs.
17. Plainly, therefore, Section 27 was understood as not
applying to SAD cases, even though it was in the statute book
for many years. Yet, with the introduction of the circular and
then the notification (No. 93), the Customs authorities started
insisting that such limitation period which was prescribed
with effect from 01.08.2008 (by notification) became
applicable. There is a body of law that essential legislative
policy aspects (period of limitation being one such aspect)
cannot be formulated or prescribed by subordinate
legislation. Khemka and Co. (Agencies) Private Ltd. v. State
of Maharashtra, (1975) 35 STC 571 and other decisions are
authority on the question that in matters which deal with
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substantive rights, such as imposition of penalties and other
provisions that adversely affect statutory rights, the parent
enactment must clearly impose such obligations; subordinate
legislation or rules cannot prevail or be made, in such cases.
The imposition of a period of limitation for the first time,
without statutory amendment, through a notification,
therefore could not prevail. “
10. The Hon’ble Supreme Court by order dated 26.02.2016
dismissed the SLP arising out of the order passed by the Delhi
High Court in case of Sony India Pvt. Ltd.(supra) on the
ground of limitation, however, the question of law was kept
open.
11. The Hon’ble Bombay High Court in case of CMS Info
Sytems Ltd. v. Union of India (supra) has considered the
decision of the Delhi High Court and distinguished the same
as under:
“33. It is submitted that the Hon’ble High Court of Delhi has
clearly opined and held that the provisions of the Customs
Act on the rules and mechanism for refund are incorporated
by reference in Section 3(5) of the CTA only “so far as may
be” applicable. Since SADC is levied under Section 3(5) and
that is refundable only on subsequent sale, then, no limitation
period can possibly be imposed for advancing a refund claim.
We have carefully perused the above observations and in the
light of the analysis of the statutory provisions and the
scheme of refund by us, with greatest respect, we are unable
to agree with the High Court of Delhi on this point. The Rules
and Regulations under the provisions of the Customs Act,
1962, including those relating to drawback, refund and
exemption shall so far as may be applied and this reveals that
for the purposes of making an application seeking refund, its
consideration, that Customs Act and its provisions are made
applicable even to the Tariff Act and the duties mentioned
thereunder. Therefore, a provision for drawback, refund and
exemption from such duties can be made by relying on the
Customs Act, 1962. The power to refund is to be found in
Section 27 of the Customs Act, 1962, and that was always
there. The amendment to the notification introducing aPage 11 of 20
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limitation for seeking refund apart, Section 27 with its
condition of a limitation period was throughout on the statute
book. That is the only provision enabling granting refund of
any duty is undisputed. The notification granting exemption
and under consideration in the case, enables claiming a
refund of duty (SAD) but the power to grant it is in the
substantive law. Precisely, that is the case herein. Further,
we find that there is an exemption granted and which is
conditional. The exemption being conditional, it is not
permissible to pick and choose convenient conditions of the
exemption notification and leave out those which to parties
like the petitioners, appear to be onerous and excessive. We
do not see how in the teeth of a clear provision in the
exemption notification can the assessee/petitioners before us
contend that the exemption notification is valid for everything
else but when it comes to period of limitation therein, that is
excessive or unfair, unjust and arbitrary. Once the exemption
is conditional, then, all the conditions therein have to be
complied with. If that provides for refund, but the application
in that behalf is to be made within a specified period, then,
that cannot be said to be excessive and arbitrary, far from
being unfair, unjust and unreasonable. It cannot be termed
illegal as well for the simple reason that sub-section (1) of
Section 27 of the Customs Act, 1962, which enables claiming
of refund by making an application itself speaks of one year
outer limit. That is never challenged, including in the present
proceedings. That the period of one year commences from
the payment of the duty. If that is how Section 27 is worded
and every duty is included in its ambit and scope, then, an
application seeking refund of the same has to abide by it,
including the bar of limitation contained therein. That is how
consistent with that provision even the special exemption
notification carries the same stipulation or condition. We do
not see how insistence on complying with it can be said to be
imposing an unreasonable, unfair and unjust restriction. Once
the nature of the right is considered, then, all the more we
are unable to agree with Mr. Patil. There is no vested, much
less absolute right in the petitioners to seek refund. Even a
refund must be within the framework of the statute and
admissible on the terms thereof. We are not inclined to agree
with him that compliance with this period is calling upon the
petitioner to do or perform something which is impossible.
The exemption notification does not impose any new
condition as has been read into it. It grants the exemption
from payment of duty conditionally. The exemption can be
availed of provided the goods which are imported are subject
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referred to in both the enactment and the notification. If the
import is for subsequent sale, then, that invoice must carry a
stipulation that no credit for the additional duty of customs
shall be admissible. The importer thereafter can file a claim
for refund of the additional duty of customs paid on the
imported goods before the expiry of one year from the date of
payment of additional duty of customs.
34. Mr. Patil would submit that the importer shall pay on
sale of the said goods appropriate sales tax or value added
tax, as the case may be, is equally a condition and further
requirement is providing of copies of documents along with
refund claim. Else, no refund is admissible. We are of the
opinion that it is not possible to guess as to whether the
refund application would be held to be non-maintainable
purely on the grounds or for the reasons suggested. If it is
made within a period of one year from the date of payment of
the additional duty of customs, then, because there is no
subsequent sale and the documents evidencing that, as also
proof of payment of the sales tax or local taxes are required
to be produced, that their production is also mandated in a
particular period and within a particular time limit is not
something which we are required to call upon and decide. We
have before us a case of rejection of a refund application
simply because it was not filed within one year from the date
of payment of the additional duty of customs. In such
circumstances and when that stipulation is challenged, all
that we can hold is that we are unable to agree, with greatest
respect, with the view taken by the Hon’ble High Court of
Delhi. With greatest respect, if the exemption can only be
claimed within the statutory provisions and not beyond the
same, such conditional exemption including the stipulation as
above has not been challenged. Only one condition therein
cannot be declared ultra vires because the petitioners desire
to brush it aside. The petitioners have accepted the position
that if this exemption notification had not been issued in
exercise of the statutory power, no exemption could have
been claimed at all. In these circumstances, merely because a
condition is imposed to file a refund application and which is
in the nature of a time-bar or limitation, that cannot be held
to be onerous, excessive and therefore ultra vires Article 14
of the Constitution.
39. Mr. Patil, appearing before us, draws support from all the
judgments cited and essentially on the reasoning that refund
in the present case could be claimed only after the
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sold, the refund could not have been claimed at all. If the
exemption notification grants an exemption in the manner
noted by us, then, it could have been granted only in that
mode and not another. In the present case, the exemption
Notification states that the importer shall file a claim for
refund on the additional duty of customs paid on the
imported goods before the expiry of one year from the date of
payment of additional duty of customs. The exemption is
granted from the payment of additional duty. That can be
availed of provided the goods are imported into India for
subsequent sale. However, all the conditions envisage first
payment, second a stipulation that when such goods are sold,
invoice must indicate that no credit for additional duty of
customs shall be admissible. Thirdly, if at all a refund claim is
to be laid, it must be filed within one year from the date of
payment. Only in these circumstances and if the goods are
sold, the payment of tax as required has to be evidenced as
also to its proof produced would not mean that we can
override other conditions. Pertinently, it is not regarding all
the conditions but only with regard to the limitation that this
argument of Mr. Patil is canvassed. Even when the
notification was first issued on 14-9-2007 there may not have
been a stipulation with regard to the period for refund, but
the clause was that the refund claim shall be filed within the
Jurisdictional Customs Officer. The power to consider that
refund claim and grant it, if permissible, is traceable to
Section 27 of the Customs Act, 1962. Therefore, it was
impossible to ignore the statutory bar and contained in sub-
section (1) of Section 27 at any time.
40. All the more, therefore, the reliance on the Division
Bench’s judgment in the case of Weikfield Products Company
(India) Pvt. (supra) is misplaced.
12. It appears that the SLP filed by the assessee challenging
the order of the Bombay High Court is pending for
consideration.
13. As held by the Delhi High Court in the case of Sony India
Pvt. Ltd. (supra), 4% SAD, additional and Special Additional
Customs Duty under the Customs Tariff Act, 1975 are in
nature of sales-tax/ VAT to counter-balance the same. Such
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duty was imposed to offset any advantage that importers
might secure by way of a non-discriminatory levy, by import of
goods at cost or prices lower than what would be obtained by
domestic manufacturers. As per Section 3(5) read with
Section 3(8) of the Custom Tariffs Act, 1975, the provision of
the Act and the Rules and Regulation made thereunder
including those relating to drawbacks, refunds and exemption
from duties would be applicable to duty leviable under the
Customs Tariff Act, 1975.
14. Accordingly, the Hon’ble Delhi High Court has held that
by way of a notification, limitation period could not have been
formulated or prescribed being a subordinate legislation as
Section 27 of the Act does not prescribe any limitation. As
against that the Hon’ble Bombay High Court in case of CMS
Info Systems Ltd. (supra) is of the opinion that it is entirely for
the Central Government to take a decision with regard to
exemption conditions to be imposed therein which includes
the condition of providing the limitation to the refund claim to
be made by the assessee. The Hon’ble Bombay High Court
was, therefore, of the opinion that it is that statute and the
other one which envisages levy, imposition and recovery of
customs duties.
15. The Hon’ble Bombay High Court has considered the
proposition that there is no vested much less an absolute right
to seek a refund and such refund may be claimed within the
frame work of the statute and admissible on the terms
thereof. It was, therefore, held that exemption Notification
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does not impose any new condition as has been read into but
only grants exemption from payment of duty conditionally,
which includes all the duties that are referred to in both the
enactment and notification. It was, therefore, held by the
Hon’ble Bombay High Court that the power to refund is to be
found in Section 27 of the Act and amendment to the
notification introducing a limitation for seeking refund apart,
Section 27 of the Act with its condition of a limitation period
was throughout on the statute book and that was only
provision enabling granting refund of any duty, is undisputed.
On such reasoning, the Hon’ble Bombay High Court has
distinguished the judgment of the Delhi High Court.
16. In view of such conflicting views we would therefore
have to examine the issue in detail.
17. Section 27 of the Act regarding refund reads as under:
“27. Claim for refund of duty.
(1) Any person claiming refund of any duty or interest,-
(a)paid by him; or
(b)borne by him,
may make an application in such form or manner as may be
prescribed for such refund for refund to the Assistant
Commissioner of Customs or Deputy Commissioner of
Customs , before the expiry of one year , from the date of
payment of such duty or interest.”
18. By Notification No. 102/2007 issued in exercise of power
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conferred by sub-section(1) of Section 25 of the Act, the
Central Government has exempted goods falling within the
First Schedule to the Customs Tariff Act, 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 Customs Tariff Act, 1975 as per
condition mentioned in Clause (2) of the said Notification,
which reads as under:
“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 duty
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,
(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 alla, provide copies of the
following documents alongwith 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.”
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19. Notification No. 93/08 has substituted the sub-clause (c)
of clause 2 of Notification No. 102/07, which read as
under:
“(c) the importer shall file a claim for refund of the said
additional duty of customs paid on the imported goods
with the jurisdictional custom officer before the expiry of
one year from the date of payment of the said additional
duty of customs.”
20. In view of the above provisions and the notifications,
sub-clause (c) of Clause 2 of the Notification No. 102/07
provides that the importer shall file a claim for refund of the
said additional duty of customs paid on the imported goods
with the jurisdictional custom officer and the same is now
further clarified by substituting and prescribing limitation that
such refund claim should be filed before the expiry of one year
from the date of payment of the said additional duty of
customs.
21. The issue considered by the Hon’ble Delhi High Court
with regard to the power of the Central Government to
prescribe limitation in the notification granting exemption in
view of the provision of Section 3(8) of the Customs Tariff Act,
1975, which refers to the applicability of the provision of
Section 27(1) of the Act for refund of claim which provides for
limitation of one year. However, it appears that the Hon’ble
Bombay High Court has considered that it is an Act
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consolidated to the amended law relating to the custom duty
and, therefore, such limitation could have been prescribed by
the notification issued while exercising the powers under
Section (1) of Section 25 of the Act.
22. In our opinion, when the provision of Section 27 of the
Act prescribes the limitation for filing the application for
refund claim before the expiry of one year from the date of
payment of such duty or interest, the same could not have
been further prescribed for filing refund claim by subordinate
legislation by way of notification for special additional duty
(SAD) which is not covered by that section as held by the
Hon’ble Delhi High Court.
23. Section 27 of the Act provides for claim for refund of
duty by the assessee if application is made before the expiry
of one year from the date of payment of such duty. As per
Notification No.102/07, the assessee is entitled to exemption
from payment of special additional duty on fulfillment of the
condition stated therein. Condition No. (c) thereof stipulates
that the importer shall file a claim for refund of special
additional duty of customs paid on the imported goods with
the jurisdictional custom officer. Therefore, the question
arises when such claim for duty is to be filed. Answer to such
question would be under Section 27 of the Act for claim for
refund of duty, which is prescribed as before expiry of one
year from the date of payment of the duty but duty does not
refer to SAD. Therefore, by substituting Clause (c) of the
Notification No. 102/07 by Notification No. 93/08 prescribing
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the limit of one year from the date of payment of SAD would
amount to amending the provision of the Act. As the provision
of Section 27 of the Act providing mechanism of filing of claim
for custom duty from the date of the payment of duty would
not be applicable to payment of SAD, therefore, the same
provision could not have been extended by Notification being
a legislative policy as it would amount to dealing with
substantive right being a period of limitation for claiming of
refund. Therefore, imposition of a period of limitation by way
of Notification without any statutory amendment, is not
permissible in law. We, therefore, respectfully agree with the
view expressed by the Hon’ble Delhi High Court.
24. In view of the above analysis, we are of the opinion that
the CESTAT has not committed any error in following the
decision of the Delhi High Court in case of M/s. Sony India
Pvt. Ltd (supra) and no substantial question of law arises from
the impugned order passed by the CESTAT.
The Appeal is, therefore, accordingly dismissed.
(BHARGAV D. KARIA, J)
(PRANAV TRIVEDI,J)
SAJ GEORGE
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