2013 (11) TMI 1300 - AT - Customs

Import and sale of Timber - Refund of SAD - Whether the respondents are entitled to refund on the basis of conversion factor notified in Public Notice No. 21/2012 dated 11/05/2012 - Held that - There is no logic for adopting the formula of Karnataka Forest department has been given in the Public Notice. There is also no indication as to whether there were different formulae of conversion in other States and there is no indication why they were not taken into account if they were there,. There is also no logic as to why the ratio of Gujarath Forest Department preferred to the ratio of Karnataka Forest Department, except for the fact that if the formula of Gujarat Forest Department is adopted the quantum of refund payable would be less. In such a situation, it would be difficult to take a view that this will have a retrospective effect - there is absolutely no logic in applying this Public Notice retrospectively and in fact, the Public Notice itself has been issued to maintain uniformity and not to adopt a particular ratio or formula to ensure that it is correct - Decided against Revenue.

Summary

Issues involved:
Determining entitlement to refund based on a conversion factor for timber imported and sold in India, application of conversion formula pre and post Public Notice No.21/2012, validity of guidelines with retrospective effect, relevance of different state practices in timber volume calculation, justification for refund claims, applicability of circular guidelines, appeal filed by the department disregarding National Litigation Policy.

Analysis:
The key issue in this case revolves around the entitlement to refund based on a conversion factor for timber imported and sold in India. The Commissioner (Appeals) differentiated between refund claims filed for timber imported before and after 11.5.2012, stating that the modified formula in Public Notice No.21/2012 would apply only to imports post that date. The Revenue sought a stay against these orders, emphasizing that refunds under the old formula would have to be paid if implemented.

The judgment delves into the Public Notice's directives regarding the conversion factor for timber logs, highlighting discrepancies in practices among different state Forest Departments. The Public Notice mandated the adoption of a specific conversion factor for refund claims of Special Additional Duty of Customs, emphasizing the importance of accounting for the entire volume of logs declared on the Bill of Entry. The rationale behind favoring one state's formula over another was questioned, with the focus on ensuring uniformity rather than clarifying past ratios.

Furthermore, the judgment references a circular issued by the Board, which had been upheld by the High Court of Madras in a separate case. The circular's validity was upheld, with the Department clarifying it as guidelines to streamline customs office operations. However, the judgment emphasizes that the issue at hand is not the validity of guidelines but whether they have a retrospective effect, drawing a distinction from the Madras High Court case.

Additionally, the judgment addresses the department's appeal filing behavior, pointing out that a significant number of cases involved amounts less than Rs.5 lakhs, contrary to Board instructions and the National Litigation Policy. The failure to adhere to policy guidelines raised concerns about the appropriateness of the appeals filed.

In conclusion, the judgment rejects the appeals, finding no merit in challenging the Commissioner (Appeals)'s orders. The decision emphasizes adherence to established guidelines, the lack of justification for a retrospective effect, and the importance of following policy directives to maintain consistency in decision-making processes.