2010 (12) TMI 1018 - AT - Customs

Refund claim - assessee cleared the goods on payment of VAT and filed a refund claim in terms of Notification No. 102/07-Cus, the refund claim was rejected on the ground that the appellants has not made endorsement on the invoices as per condition 2(b) of the said Notification by the lower authorities - Held that - As no SAD is shown in the invoice which amounts that the endorsement as per condition 2(b) of the Notification has been made by the appellants and as held in the case of Equinox Solution 2010 (12) TMI 74 - CESTAT, MUMBAI the appellants are entitled for refund claim. Hence, the appeal is allowed

Summary

Issues:
Appeal against denial of refund claim of SAD paid by the appellants.

Analysis:
The appellants filed a refund claim for the 4% SAD initially paid by them during import. Subsequently, they cleared the goods by paying VAT and filed a refund claim under Notification No. 102/07-Cus. The claim was rejected by the lower authorities citing non-compliance with condition 2(b) of the said Notification. The main contention was the lack of endorsement on the invoices as required by the Notification. The appeal was filed against this rejection.

During the hearing, no one appeared on behalf of the appellants, but the matter was considered for disposal on merits. The Departmental Representative (DR) argued that the appellants' failure to comply with condition 2(b) justified the rejection of the refund claim by the lower authorities. After reviewing the submissions and records, the judge noted that although the appellants did not endorse the invoice as required, the invoice clearly showed SAD as zero, indicating that the duty was not passed on to the buyer. This fact was crucial as it meant the buyer could not claim any credit for the duty shown on the invoice.

The judge referred to a previous decision by the Hon'ble Apex Court in the case of Malwa Industries, emphasizing that exemption Notifications should be interpreted liberally. Citing the Equinox Solution Ltd. v. CCE case, the judge highlighted that the purpose of the Notification was to ensure importers do not bear SAD on goods imported for resale if the appropriate ST/CST/VAT had been paid. SAD served as a precautionary measure to verify whether the necessary taxes had been discharged. In this case, it was evident that the appellants had paid the required taxes, enabling them to claim a refund of the SAD paid. The judge concluded that since no SAD was shown on the invoice, it implied that the appellants had effectively made the required endorsement as per condition 2(b) of the Notification, entitling them to the refund claim. The appeal was allowed, granting consequential relief to the appellants.

This detailed analysis of the judgment showcases the key arguments, legal interpretations, and precedents considered by the judge in reaching the decision to allow the appeal and grant the refund claim to the appellants.