The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh Regional Bench, has allowed an appeal concerning refund of Special Additional Duty (SAD), holding that the one-year limitation prescribed through Notification No. 93/2008-Customs could not be applied to defeat the refund claim where the limitation requirement itself had been read down by the Delhi High Court.
The bench of S. S. Garg (Judicial Member) set aside the order rejecting the refund claim on limitation grounds, granting consequential relief in accordance with law.
The dispute arose from imports made during 2012-2014 by the assessee, which was engaged in importing and trading various plastic and textile products. The assessing authority had rejected the declared values in several Bills of Entry and re-determined the assessable value under Rule 5 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.
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The assessee challenged the assessments before the Commissioner of Customs (Appeals), Ludhiana. By an order dated March 11, 2022, the appellate authority set aside the assessment order and accepted the declared values in respect of all 14 Bills of Entry, including Bill of Entry No. 93 dated June 18, 2012 and Bill of Entry No. 9482688 dated March 5, 2013.
Following the appellate decision, the assessee filed refund claims on December 7, 2022 for 4% SAD in respect of the two Bills of Entry.
A third claim related to Bill of Entry No. 7697017 dated August 17, 2012, which had been provisionally assessed. According to the record, even after approximately 11 years, the provisional assessment had not been finalised. The assessee had raised a query on ICEGATE in October 2020 and discovered that a pending lost report existed in relation to the Bill of Entry. The Revenue was also unable to trace the relevant files.
The department rejected the refund claim relating to the provisionally assessed Bill of Entry, amounting to ₹1,53,373, by Order-in-Original dated May 8, 2023.
The rejection was based on the limitation prescribed under Notification No. 93/2008-Customs dated August 1, 2008. The assessee challenged the rejection before the Commissioner (Appeals), but the appeal was dismissed on February 14, 2024.
The assessee thereafter approached the CESTAT.
The assessee argued that the refund could not have been rejected merely by invoking the one-year limitation introduced through Notification No. 93/2008-Customs. The original Notification No. 102/2007-Customs dated September 14, 2007 did not prescribe such a limitation period. The one-year requirement was subsequently introduced through Notification No. 93/2008-Customs, which amended the earlier notification.
The assessee relied particularly on the Delhi High Court’s ruling in Sony India Pvt. Ltd. v. Commissioner of Customs, New Delhi, reported at 2014 (304) ELT 660 (Delhi), as well as subsequent decisions including Commissioner of Customs (ICD Imports) v. Suzuki Motorcycle India Pvt. Ltd. and Premier Timber and Trading Pvt. Ltd. v. Commissioner of Customs (Import).
The assessee also advanced an alternative argument concerning the provisionally assessed Bill of Entry. Because the assessment remained provisional and had never been finalised, the question of limitation could not arise in the manner asserted by the Department. According to the assessee, the limitation period in such circumstances would commence only upon finalisation of the assessment.
The Department opposed the appeal and argued that the limitation prescribed under the notification had to be strictly applied.
The Revenue relied upon decisions of the Bombay High Court, including CMS Info Systems Ltd. v. Union of India, 2017 (349) ELT 236 (Bom.), and Commissioner of Customs, NS-III v. DSM Sinochem Pharmaceuticals (I) Pvt. Ltd., 2018 (359) ELT 509 (Bom.).
According to the Department, the assessee had failed to submit the refund claim within the prescribed one-year period and therefore the rejection was legally justified. The Revenue also contended that the Delhi High Court’s decision in Sony India was distinguishable on the facts of the present case.
The Tribunal acknowledged that there was a divergence between the views of the Delhi and Bombay High Courts on the validity and application of the one-year limitation prescribed by the notification.
The Tribunal noted that while Notification No. 102/2007-Customs, as amended by Notification No. 93/2008-Customs, prescribed filing of the refund claim within one year from payment of SAD, the Delhi High Court had read down this requirement in Sony India and subsequently in Suzuki Motorcycle India.
At the same time, the Tribunal noted that the Bombay High Court had taken a contrary view and upheld the limitation prescribed under the notification.
The Chandigarh Bench then considered its own earlier decision in Ghaio Mall and Sons v. Commissioner of Customs, Ludhiana, Final Order No. 62972/2018 dated September 12, 2018.
In that case, the Tribunal had relied upon the Delhi High Court’s judgment in Sony India and held that the one-year limitation specified through the notification would not apply unless and until the basic provisions of Section 27 of the Customs Act, 1962, dealing with refunds, were made applicable to such SAD refunds.
The Tribunal reproduced the Delhi High Court’s reasoning that an essential legislative policy such as a period of limitation could not ordinarily be introduced through subordinate legislation where the parent statute itself had not imposed such a restriction.
The Delhi High Court had consequently directed that the amending notification be read down to the extent that it imposed the limitation period, answering the legal question in favour of the assessee and against the Revenue.
Applying the ratio of the Delhi High Court’s decision in Sony India, the CESTAT held that the issue was covered in favour of the assessee.
The Tribunal therefore set aside the impugned order and allowed the appeal with consequential relief, if any, in accordance with law.
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