By TIOL News Service

MUMBAI, JAN 28, 2015: THE Commissioner of Customs (Appeals)rejected the SAD refund of Rs.55,673/- in respect of sales invoice dated 02/11/2009 on the ground that VAT/Sales Tax amount was paid on 14/12/2009, which is subsequent to filing of refund application on 20/11/2009 and, therefore, at the time of filing of refund claim, the appellant had not fulfilled the condition of payment of VAT.

The importer is in appeal before the CESTAT.

It is submitted that the Special Additional Duty (SAD) of Customs was paid in respect of Bill of Entry dated 26/08/2008 on 07/01/2009. The goods imported under the said bill of entry were sold over a period time and one such VAT payment was on 14/12/2009 in respect of sale invoice dated 02/11/2009. Inasmuch as the appellant is entitled to a time limit of 21 days from the close of the month for payment of VAT, the actual remittance of tax was made on 14/12/2009. Otherwise, the sale in respect of which refund claim was made had been completed on 02/11/2009 before the submission of the refund claim.

It is further submitted that in any case, since the VAT liability has also been discharged on 14/12/2009, that is, within a period of one year from the date of payment of SAD, the department should not have rejected the refund claim for the amount of Rs.55,673/- relating to the invoice dated 02/11/2009.

The AR agreed with the facts presented but submitted that when the refund claim was filed on 20/11/2009, the appellant had not discharged the VAT liability to the extent of Rs.55,673/- and, therefore, as on the date of filing of refund claim the appellant was not eligible for the refund of the said amount; the order should be upheld.

The Single Member observed -

"4.1 The refund of SAD paid on payment of VAT on subsequent sale is governed by the provisions of Notification No. 102/2007-Cus dated 14/09/2007. The conditions stipulated therein are that the goods sold in the domestic market on payment of Sales Tax/VAT and the documents evidencing payment of SAD and payment of appropriate sales tax should be produced and the claim should be made within a period of one year from the date of payment of SAD. It is not in dispute that any of these conditions have been violated. In other words, the appellant has complied with all the substantive conditions which make him eligible for refund of SAD paid. The argument that at the time of filing of the refund as on 20/11/2009, the appellant had not discharged VAT liability to the extent of Rs.55,673/-, which could at best be considered as a premature claim, but the facts remains that the appellant had paid this amount on 14/12/2009, that is, within a period of one year. Therefore, rejection of refund claim on a technical ground is not sustainable in law…."

The order was set aside and the appeal was allowed with consequential relief.

(See 2015-TIOL-200-CESTAT-MUM)