In a major relief to Castrol India, the Mumbai bench of CESTAT ruled that Special Additional Duty (SAD) refunds cannot be denied solely on the basis of a change in brand name, provided the product remains the same in substance.
In a significant judgment, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Mumbai bench, has ruled in favor of Castrol India Ltd., holding that a refund claim under Special Additional Duty (SAD) cannot be denied merely due to a brand name change, if the goods imported and sold are materially identical.
Castrol India Ltd., headquartered in Mumbai, Maharashtra, is a leading manufacturer and marketer of automotive and industrial lubricants. The company imported a product under the name “Long Life Coolant” and later sold it in India under the trade name “Castrol Radicool.” Despite paying SAD at the time of import under Customs Tariff Heading 3820 00 00, the refund claim was initially approved and later challenged by the department citing a brand name mismatch.
The revenue department claimed that the change in brand constituted misrepresentation and invoked Section 28(1) of the Customs Act, 1962, demanding recovery of the refund along with interest and penalties. The Commissioner (Appeals) upheld this view.
However, Castrol India contended that the product was chemically and physically the same, and the change in name was only for marketing purposes. The company provided invoices, VAT documents, and sales records to demonstrate that the goods were sold in the same form as imported.
The two-member CESTAT bench, consisting of Judicial Member P. Dinesha and Technical Member K. Anpazhakan, noted that the documentary evidence clearly showed the product remained unmodified. They ruled that the brand label change did not amount to misrepresentation and did not violate refund conditions under Notification No. 102/2007-Cus.
The tribunal allowed the appeal and held that Castrol India was entitled to the SAD refund.
