2013 (11) TMI 994 - AT - Customs

Refund of Special Additional Duty of Customs - Notification No. 102/2007-Cus dated 14.9.2007 and Notification No.29/2010-Cus. dated 27.10.2010 - Exemption from SAD for all pre packed goods intended for retail sale - whether an importer can be penalized for not having claimed exemption under Notification No. 29/2010-Cus at the time of importation by refusing to grant refund under Notification No. 102/2007-Cus, when both the notifications were in operation on the date of importation and date of claiming refund - Held that - this is not a case where the importer is seeking change in assessment made at the time of importation of goods. Only in such a situation, the decision of the Apex Court in Priya Blue Industries (2004 (9) TMI 105 - SUPREME COURT OF INDIA) would apply. Even in such cases, the Hon ble Delhi High Court has clarified that the said decision would apply only in a case where there was a dispute between the Department and the importer at the time of importation of the goods and the matter was adjudicated either through assessment of BE or through further proceedings. Refund is not claimed under section 27 of the Customs Act. The appellant is not requesting for change of the assessment made at the time of importation. For grant of refund of SAD as per notification 102/07-Cus re-assessment of Bills of Entries are not prescribed under the notification - In the case of Central Excise duty there is a consequence in paying duty on exempted goods because the assessee will be able to pass on the duty incidence on the raw material and capital goods to the next stage by paying duty whereas such incidence cannot be passed on if the goods are exempted. Thus there is an adverse consequence to revenue when excise duty is paid on an exempted product - no reason to deny refund under Notification No. 102/2007-Cus if the appellant satisfies the conditions therein - Decided against Revenue.

Issues Involved:

1. Refund of Special Additional Duty of Customs (SAD) under Notification No. 102/2007-Cus.
2. Requirement to challenge the order of assessment to claim a refund.
3. Mismatch between bills of entry and sales invoices.
4. Goods sold prior to or on the same day of importation.
5. Exemption under Notification No. 29/2010-Cus not availed at the time of importation.

Detailed Analysis:

1. Refund of Special Additional Duty of Customs (SAD) under Notification No. 102/2007-Cus:

The core issue revolves around the refund of SAD levied under section 3(5) of the Customs Tariff Act, 1985, as per Notification No. 102/2007-Cus. The importer claimed refunds post-importation after selling the goods on payment of VAT. The adjudicating authority partially sanctioned and partially denied the claims based on various discrepancies.

2. Requirement to Challenge the Order of Assessment to Claim a Refund:

The adjudicating authority primarily denied refunds because the importer did not challenge the order of assessment as per the Bills of Entries. The Revenue argued that the importer should have contested the original assessment to claim refunds under Notification No. 102/2007-Cus, especially since the goods were eligible for exemption under Notification No. 29/2010-Cus. The Commissioner (Appeals) countered this by stating that the assessment was based on Notification No. 19/2006-Cus, and there was no necessity to invoke Notification No. 29/2010-Cus, which was irrelevant for denying the refund. The Commissioner (Appeals) concluded that the importer's claim under Notification No. 102/2007-Cus was legally tenable without challenging the assessment.

3. Mismatch Between Bills of Entry and Sales Invoices:

Refunds were also denied due to discrepancies between the bills of entry and the sales invoices. The Commissioner (Appeals) noted that the importer had presented details to show the tally of the imported goods with the local sales invoices but found no such details in the records. The Commissioner upheld the rejection of claims based on mismatched descriptions, emphasizing adherence to the principles of natural justice.

4. Goods Sold Prior to or on the Same Day of Importation:

Another ground for rejection was that some goods were sold before or on the same day of importation, indicating a lack of physical ownership. The Commissioner (Appeals) found the appellant's explanation unconvincing and upheld the rejection of these claims, citing non-compliance with the principles of natural justice as no opportunity was given to the importer to present their case.

5. Exemption Under Notification No. 29/2010-Cus Not Availed at the Time of Importation:

The Revenue contended that the importer should have availed the exemption under Notification No. 29/2010-Cus at the time of importation and could not later claim a refund under Notification No. 102/2007-Cus without challenging the original assessment. The Commissioner (Appeals) and the Tribunal found that there is no provision in the Customs Act, 1962, compelling an importer to avail a specific exemption. The Tribunal held that the importer's claim for refund under Notification No. 102/2007-Cus was valid without challenging the original assessment, distinguishing it from the Priya Blue Industries case, which involved a dispute at the time of importation.

Conclusion:

The Tribunal concluded that the importer's claim for a refund under Notification No. 102/2007-Cus was valid and legally tenable without challenging the original assessment. The Tribunal dismissed the Revenue's appeals, upheld the Commissioner (Appeals) order, and directed adherence to the principles of natural justice in re-evaluating the rejected claims. The Tribunal also disposed of the stay applications and cross objections in favor of the respondent.

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