2013 (8) TMI 272 - AT - Customs

Refund of SAD Benefit of Notification No. 102/2007 - assessee imported teak wood logs they were cut into small pieces and sold in the market revenue was of the view that teak wood logs were converted into small pieces - the classification of the goods were changed thus the assessee were not entitled for the benefit of Notification No.102/07 - department contended that the assessee had used the goods imported - Held that - The assessee was entitled for refund of SAD at the rate of 4% - identity of the article did not undergo any fundamental change so as to conclude that what was imported by the assessee was different from the item which ultimately was sold by them in the local market decided in favour of assessee.

Summary

Issues Involved: Appeal against denial of refund of Special Additional Duty (SAD) at 4% due to using imported goods in manufacturing new products.

Analysis:
1. Issue of Refund Denial: The appellants appealed against the denial of refund of SAD at the rate of 4% on the grounds that they used the imported teak wood logs to manufacture new products for sale in the market. The Revenue contended that the conversion of teak wood logs into smaller pieces changed the classification of the goods, making the appellants ineligible for the benefit of Notification No.102/07-Cus.

2. Judicial Precedent: The case referred to the decision of the Hon'ble Gujarat High Court in the matter of CC vs M/s. Variety Lumbers Pvt. Ltd. The High Court held that cutting timber logs into different sizes did not alter the fundamental identity of the imported goods, and no new product emerged from the process. Therefore, the High Court ruled in favor of granting a refund of SAD at 4% to the importer. This decision was subsequently affirmed by the Hon'ble Supreme Court, establishing a binding precedent.

3. Decision and Ruling: In light of the precedent set by the Supreme Court in the case of M/s. Variety Lumbers Pvt. Ltd., the Appellate Tribunal held that the appellants were indeed entitled to a refund of SAD at the rate of 4%. The Tribunal concluded that the conversion of teak wood logs into smaller pieces did not result in the creation of a new product, maintaining the original identity of the goods. Consequently, the appeals were allowed, and the appellants were granted the refund with consequential relief.

This detailed analysis of the judgment highlights the core issues, legal arguments, judicial precedents, and the final decision rendered by the Appellate Tribunal in favor of the appellants seeking a refund of SAD at the rate of 4%.