Special Additional Duty Refund Allowed Despite Nil VAT on Imported Goods

Centax Editorial Board

February 3, 2026

• 3 min. read

Case Details: HLG Trading vs. Principal Commissioner of Customs, Chennai (2026) 38 Centax 158 (Mad.)

Judiciary and Counsel Details

C. Saravanan, J.
Shri B. Satish Sundar, for the Petitioner.
Ms Anu Ganesan, Senior Standing Counsel, for the Respondent.

Facts of the Case

The appellant filed for a refund of Special Additional Duty of Customs on imported products, even though VAT/Sales tax applicable on such products as sold by them was nil/zero. Returns were filed and duly certified by a Chartered Accountant, showing compliance with the applicable VAT/Sales tax requirements. The Department did not dispute the filing or certification but questioned the admissibility of the refund on the grounds of zero VAT/Sales tax. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that a refund under Notification No. 102/2007-Cus. is admissible despite the VAT/Sales tax applicable on the imported products being nil/zero. It was observed that the appellant had appropriately discharged the tax liability by filing returns certified by a Chartered Accountant, and that a nil rate of VAT/Sales tax qualifies as an appropriate payment under Section 27A of the Customs Act, 1962. Consequently, the claim for a refund of Special Additional Duty could not be denied.

List of Cases Reviewed

G.T. Jayanti Agrochem (India) Pvt. Ltd. v. Commissioner — W.P. Nos. 20995-20998 of 2016 & 2578-2581 of 2017, decided on 13-7-2020 by Madras High Court — Reversed [Para 3]

List of Cases Cited

Ajay Industrial Corporation Ltd. v. Deputy Commissioner — 2025 (391) E.L.T. 297 (Bom.) = (2024) 24 Centax 396 (Bom.) — Relied on [Paras 24, 26]
Amicus Communications v. Commissioner — 2016 (338) E.L.T. 263 (Mad.) — Referred [Para 22]
BPL Ltd. v. R. Sudhakar — (2004) 7 SCC 219 — Referred [Para 14]
Commissioner v. Finacord Chemicals (P) Ltd. — 2015 (319) E.L.T. 616 (S.C.) — Referred [Para 16]
Commissioner v. Gaytri Timber Pvt. Ltd. — 2019 (367) E.L.T. 772 (A.P.) — Referred [Para 16]
Dish TV India Ltd. v. Union of India — 2018 SCC Online Del 10793 — Referred [Para 16]
Elite Green Pvt. Ltd. v. Under Secretary, Ministry of Finance — 2023 (386) E.L.T. 245 Ker.) — Referred [Para 22]
HLG Trading v. Commissioner — W.P. No. 37472 of 2016, decided on 24-1-2020 by Madras High Court — Relied on [Para 29]
Johnson Lifts Pvt. Ltd. v. Assistant Commissioner — 2020 (374) E.L.T. 519 (Mad.) — Referred [Para 14]
Karnataka Power Corporation Ltd. v. Commissioner — 2023 (383) E.L.T. 528 (Mad.) = (2022) 1 Centax 81 (Mad.) — Relied on [Paras 24, 27]
KSJ Metal Impex (P) Ltd. v. Under Secretary (Cus.), Ministry of Finance — 2013 (294) E.L.T. 211 (Mad.) — Referred [Para 16]
Kutoba Agricultural Machinery India Pvt. Ltd. v. Commissioner — 2017 SCC OnLine CESTAT 4916 — Relied on [Paras 4, 5, 6, 29]
Micromax Informatics Limited v. Union of India — 2018 (361) E.L.T. 968 (Del.) — Referred [Para 16]
P.P. Products Ltd. v. Commissioner — 2019 (367) E.L.T. 707 (Mad.) — Referred [Para 14]
Principal Commissioner v. Riso India Pvt. Ltd. — 2016 (333) E.L.T. 33 (Del.) — Referred [Para 16]
Ranbaxy Laboratories Ltd. v. Union of India — 2011 (273) E.L.T. 3 (S.C.) — Referred [Para 16]
Shakun Overseas Ltd. v. Commissioner — 2013 (297) E.L.T. 14 (Mad.) — Referred [Para 22]
Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association — (1992) 3 SCC 1 — Referred [Para 14]
Under Secretary (Cus.), Ministry of Finance v. Parmar International — W.A. No. 927 of 2013, decided on 25-4-2022 — Referred [Para 22]
Union of India v. B.T. Patil & Sons — 2024 (388) E.L.T. 399 (S.C.) = (2024) 15 Centax 101 (S.C.) — Relied on [Paras 24, 25]