SAD Refund Can’t Be Denied Due to Non-Traceable Original Documents and Invoice Endorsement Defects: CESTAT

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Special Additional Duty (SAD) refund claims cannot be denied merely because original documents became untraceable after being submitted to the department. The bench of Ajayan T.V. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) directed the Customs authorities to grant a refund of Rs. 1.85 crore along with statutory interest reiterating that procedural lapses cannot override substantive entitlement. The dispute arose from twelve refund claims filed by M/s Supertron Electronics Pvt. Ltd. under Notification No. 102/2007-Cus dated September 14, 2007. The notification provides for refund of Special Additional Duty (SAD) paid at the time of import when the imported goods are subsequently sold in the domestic market upon payment of VAT/CST. The company, engaged in the trading of computer monitors and related parts, had imported goods through a Special Economic Zone (SEZ) unit and paid applicable customs duties, including SAD. Following the sale of the imported goods in the domestic market and payment of VAT/CST, it sought refund of the SAD component. The refund claims, amounting to over ₹2.01 crore, were initially rejected by the Customs authorities on jurisdictional grounds. Although the Tribunal had earlier remanded the matter for fresh consideration on merits, the claims were once again rejected on various grounds, including non-production of original documents, alleged failure to satisfy conditions of the notification, and absence of certain invoice endorsements. A key aspect of the case was that the original refund applications and supporting documents had already been submitted to the department and acknowledged. However, after the matter was remanded and administrative restructuring took place, the original files became untraceable within the department. The appellant reconstructed the refund claims using copies of Bills of Entry, VAT records, Chartered Accountant certificates, scanned invoices, acknowledgements, indemnity bonds and other secondary evidence. Despite this, the authorities continued to reject the claims for want of original documents. The Tribunal observed that where records clearly establish that original documents were earlier submitted and accepted by the department, the subsequent loss of those records by the department cannot become a ground for denying refund. The Bench noted that the question of jurisdiction had already been conclusively settled in an earlier round of litigation. In its previous order, the Tribunal had held that the Customs Commissionerate possessed jurisdiction to adjudicate the refund claims in light of Rule 47(5) of the SEZ Rules, 2006, CBEC Circular No. 11/2017-Cus dated March 31, 2017, and judicial precedents including the Gujarat High Court's decision in Devharsh Infotech Private Limited. According to the Tribunal, once the matter had been remanded for decision on merits, the department could not continue relying on jurisdictional objections to deny the refund. The Tribunal examined the conditions prescribed under Notification No. 102/2007-Cus and found that the appellant had substantially complied with all substantive requirements. The records demonstrated: payment of SAD at the time of import; subsequent sale of imported goods on payment of VAT/CST; non-availment and non-passing of SAD credit; and submission of Chartered Accountant certificates and reconciliation statements supporting the claims. The Bench emphasized that deficiencies such as absence of endorsements on invoices, missing original TR-6 challans, or technical documentation issues were procedural in nature and could not defeat a legitimate refund claim when the substantive conditions stood satisfied. The Tribunal placed significant reliance on the Larger Bench decision in Chowgule & Co. Pvt. Ltd. v. Commissioner of Customs, which held that SAD refunds cannot be denied merely because invoices do not contain an endorsement stating that credit of duty is not admissible. Referring to the Larger Bench ruling, CESTAT observed that once VAT has been paid on subsequent sales and there is no evidence of passing on SAD credit, refund cannot be denied on account of procedural omissions. The Bench also relied on decisions such as Kajaria Ceramics Ltd. and Progressive Alloys Pvt. Ltd., which recognized that procedural lapses cannot override substantive entitlement to SAD refund. An important piece of evidence considered by the Tribunal was a report dated August 30, 2024, issued by the Specified Officer of SIPCOT Electronic Hi-Tech SEZ. The report confirmed that applicable duties, including SAD, had been paid and that statutory records relating to duty payments and clearances were maintained by the SEZ unit. The Tribunal treated this verification as an independent and reliable confirmation supporting the appellant's claim and addressing the department's concerns regarding authenticity and correlation of documents. While the appellant referred to a total refund figure exceeding ₹2.01 crore, the Tribunal found that only claims aggregating to ₹1,85,93,345 had actually been processed and adjudicated by the department. An additional claim of approximately ₹15.67 lakh had not been supported by documents and therefore did not form part of the proceedings. Accordingly, the Tribunal restricted relief to the adjudicated amount of ₹1,85,93,345. The Tribunal further held that the appellant was entitled not only to the refund amount but also to statutory interest under Section 27A of the Customs Act, 1962. Relying on the Gujarat High Court's decision in Devharsh Infotech Private Limited, the Bench observed that an assessee cannot be made to suffer because of administrative uncertainty, jurisdictional disputes or delays attributable to the department. Once the refund is found admissible, the claimant is entitled to interest in accordance with law. Allowing the appeal, the Tribunal concluded that the appellant had satisfactorily complied with the substantive requirements contained in Paragraphs 2(a), 2(b), 2(d) and 2(e) of Notification No. 102/2007-Cus. It held that the objections raised by Customs were merely procedural and insufficient to defeat the refund claim. The jurisdictional refund sanctioning authority was directed to grant a refund of ₹1,85,93,345 together with applicable interest under Section 27A of the Customs Act, 1962, within three months from the date of receipt of the order. Case Details Case Title: M/s. Supertron Electronics Pvt. Limited Versus Commissioner of Customs Citation: JURISHOUR-1519-HC-2026(Ker) Case No.: Customs Appeal No. 41353 of 2025 Date: 02.06.2026 Counsel For Appellant: N. Viswanathan, Advocate Counsel For Respondent: Vineet Goyal, Authorised Representative Click Here To Read Order Read More: Dept. Can’t Reopen Finalized Refund Quantification by Recalculating Cenvat Credit While Implementing Tribunal Order: CESTAT

SAD Refund Can’t Be Denied Due to Non-Traceable Original Documents and Invoice Endorsement Defects: CESTAT

Membership Required

Latest articles

From Kuwaiti Dinar to US Dollar: Where Does the Indian Rupee Stand in Global Currency Race?

Agricultural Activities Can’t Be Artificially Taxed Under Multiple Service Categories: CESTAT

Customs Can’t Reject Thailand Certificate of Origin or Recalculate Value Addition Without Following FTA Verification Procedure: CESTAT

Customs Broker Licence Can’t Be Revoked Without Proof of Deliberate Collusion in Drawback Fraud: CESTAT

More like this

From Kuwaiti Dinar to US Dollar: Where Does the Indian Rupee Stand in Global Currency Race?

Agricultural Activities Can’t Be Artificially Taxed Under Multiple Service Categories: CESTAT

Customs Can’t Reject Thailand Certificate of Origin or Recalculate Value Addition Without Following FTA Verification Procedure: CESTAT

About us

Company

Categories