2013 (6) TMI 347 - HC - Customs

Refund of SAD - Notification No.102/2007 Cus - sale of goods after processing of cutting and slitting - Prime cold rolled steel (in coil), electrical steel (in coil), stainless steel (in coil), flat hot/cold rolled coil of iron, non alloy, other alloy steel, etc. - correlation between the goods imported and sold - held that - objective is to create level playing field for the domestic manufacturers and the importer. As rightly noted by the Tribunal, domestic manufacturers are not affected by SAD as they can always avail the Cenvat Credit. The importer who sells the goods without any manufacturing process would not get any benefit of credit. Therefore, by availing the benefit of exemption, such importer was required to be refunded SAD. The commodity in the instant case, subjected to processing continue to retain its distinct and original character as well as identity and this process of cutting and slitting would not amount to manufacturing. Such process is undertaken for the purpose of requirement of domestic market and by such process of cutting and slitting, merely because tariff head is changed, that would not ipso facto make the imported goods a new article with distinct name or character. It certainly does not loose its correlation with the goods imported when sold in the domestic market. - decided in favor of assessee.

Issues Involved:
1. Whether the sale of imported goods after cutting and slitting violates the condition of subsequent sale prescribed in exemption notification No.102/2007Customs.
2. Whether the Tribunal erred in relying on the decision in Vijrom Chem Pvt. Ltd. v. Commr. of Cus., Bangalore.
3. Whether the Tribunal failed to consider the interpretation of the exemption notification as per the Supreme Court's decision in Novopan India Ltd. v. CCE & Cus., Hyderabad.
4. Whether the Tribunal's order was legally valid despite not addressing all submissions and precedents pointed out by the Departmental Representative.

Issue-wise Detailed Analysis:

1. Sale of Imported Goods After Cutting and Slitting:
The primary issue was whether the process of cutting and slitting imported steel coils into varied thickness, length, and width changes the identity of the goods, thus violating the conditions of exemption notification No.102/2007Customs dated 14.09.2007. The Tribunal concluded that the process of cutting and slitting did not amount to manufacturing and the goods retained their original identity. The Tribunal remanded the matter to the original adjudicating authority to verify if the respondent could establish that the imported goods were sold after cutting and slitting, without substantive changes.

2. Reliance on Vijrom Chem Pvt. Ltd. Decision:
The Tribunal relied on the decision in Vijrom Chem Pvt. Ltd. v. Commr. of Cus., Bangalore, which supported the respondent's eligibility for exemption under notification No.102/2007Customs. The Tribunal interpreted that the notification's wording should be strictly adhered to, without adding or subtracting any terms, and focused on whether the process resulted in a new article with a distinct character and use.

3. Interpretation of Exemption Notification:
The Tribunal was accused of not considering the Supreme Court's decision in Novopan India Ltd. v. CCE & Cus., Hyderabad, which emphasizes strict interpretation of exemption notifications. However, the Tribunal maintained that the cutting and slitting process did not create a new product with a different identity, thus aligning with the principles of strict interpretation.

4. Legal Validity of Tribunal's Order:
The Tribunal's order was challenged for not addressing all submissions and precedents pointed out by the Departmental Representative. Despite this, the Tribunal's decision to remand the case for verification was upheld as it allowed for a thorough examination of whether the respondent met the conditions for exemption. The High Court found no error in the Tribunal's approach and concluded that the process of cutting and slitting did not amount to manufacturing, thus not altering the identity of the goods.

Conclusion:
The High Court upheld the Tribunal's decision, confirming that the process of cutting and slitting steel coils did not constitute manufacturing and did not change the identity of the goods. The matter was remanded to the original adjudicating authority for verification, ensuring that the respondent met all conditions for claiming the exemption. The appeal was dismissed, and the Tribunal's interpretation and reliance on previous judgments were deemed appropriate.

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