Pranav B Prem

In a significant ruling granting relief to importers, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, has held that the one-year limitation period prescribed for filing refund claims of Special Additional Duty (SAD) under Notification No. 102/2007-Cus dated 14.09.2007 would not be applicable. A bench comprising Dr. Rachna Gupta (Judicial Member) set aside the orders of both the adjudicating authority and the Commissioner (Appeals), New Delhi, which had earlier denied the refund claim of ₹1,91,363 filed by M/s Arjun Enterprises Pvt. Ltd. for SAD paid on imported goods under a Bill of Entry dated 02.07.2016.

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The appellant had paid the duty on 11.07.2016 and filed the refund claim on 26.07.2018, which was rejected on the ground of limitation. The authorities took the view that the claim was filed beyond the one-year time limit specified under the notification.

Contentions of the Appellant

The appellant contended that the limitation period should commence from the date of sale of goods, not from the date of payment of duty. Relying on the Delhi High Court’s ruling in Sony India Pvt. Ltd. v. Commissioner of Customs, New Delhi [2014 (304) ELT 660 (Del.)], counsel argued that the right to claim refund arises only after the sale is completed since the importer must first produce documents evidencing payment of VAT or sales tax. The appellant further cited the Dow Chemical International Pvt. Ltd. v. Commissioner of Customs, Kandla [2024 (387) ELT 621 (Tri.-Ahmd.)] decision, reiterating that the time limit should begin from the date of sale.

Findings of the Tribunal

The Tribunal referred to multiple precedents, including M/s Siya Paper Mart Pvt. Ltd., M/s Indochem & Polychem, and the Delhi High Court’s decision in Sony India Pvt. Ltd., which had categorically held that no limitation period could be imposed for filing refund claims under the said notification. Quoting from the Sony India judgment, the Tribunal observed: “The right to claim refund accrues only when the sale is completed; to uphold the limitation period from the date of payment of duty would amount to commencing limitation even before the right to claim refund arises.”

It also noted that Section 27 of the Customs Act, 1962, which deals with refund claims, does not apply to SAD refunds, as SAD is a compensatory duty meant to counterbalance VAT or sales tax on subsequent sales. The bench acknowledged that though conflicting views existed across tribunals, the Larger Bench in Ambey Sales v. Commissioner of Customs, GRFL, Ludhiana [2024 (6) TMI 257-CESTAT-Chandigarh-LB] had settled the issue, holding that: “The time limit imposed for filing refund claims under Notification No. 102/2007-Cus, as amended, is not applicable in view of the Delhi High Court’s decision in Sony India Pvt. Ltd.”

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Following the binding precedents, the Tribunal held that the rejection of the refund claim on the ground of limitation was unsustainable. It allowed the appeal and directed that the refund claim be processed accordingly. In conclusion, the CESTAT reaffirmed that the one-year limitation period under Notification No. 102/2007-Cus cannot be applied to SAD refund claims, as the right to refund arises only upon the completion of the sale of imported goods and submission of corresponding VAT/sales tax documents.

Appearance

Counsel For  Appellant: Jitin Singhal, Advocate

Counsel For Respondent: Rohit Issar, Authorized Representative

Cause Title: M/s Arjun Enterprises Pvt. Ltd.  Versus Commissioner of Customs

Case No: Customs Appeal No. 50095 of 2025

Coram: Hon’ble Dr. Rachna Gupta, Member (Judicial)