CESTAT Mumbai Directs Release Of Johnson & Johnson's SAD Refunds Adjusted Against Dropped Demand

On 11 September, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai allowed appeals filed by Johnson & Johnson Pvt. Ltd. and set aside the order passed by the Commissioner of Customs (Appeals), Mumbai-II.

A Bench comprising Judicial Member Dr. Suvendu Kumar Pati observed:

“This being admission of the Respondent-Department they should have released the amount adjusted against such drawback demand suo moto in favour of the Appellant but this has not been done.”

Johnson & Johnson had sought refunds of Special Additional Duty (SAD) paid on certain imports made during 2016-17. The Customs authorities sanctioned refunds of Rs. 14.28 lakh and Rs. 3.67 lakh but adjusted the amounts against a separate duty drawback demand pending against the company.

The company challenged the drawback proceedings. The matter eventually reached the Revisional Authority of the Government of India, which remanded it for fresh consideration. After hearing the parties again, the Assistant Commissioner passed an order in August 2024 dropping the drawback demand.

The Tribunal noted that the Department had therefore dropped the very demand against which it had adjusted the refunds. It also relied on its earlier decision in Voltas Ltd., which held that a demand does not attain finality merely because an authority has confirmed it at the first stage. Since an appellate authority may still set aside such a demand, it cannot be treated as an arrear for adjusting a refund while the demand remains under dispute.

Accordingly, the CESTAT directed the Customs Department to release the SAD refunds to Johnson & Johnson within two months, along with applicable interest as per law.

Appearances: Shri Bharath Menon, Advocate for the Appellant, Johnson & Johnson Pvt. Ltd.; Shri C.S. Vinod, Assistant Commissioner, Authorised Representative for the Respondent/Customs Department.