2015 (3) TMI 119 - AT - Customs

Refund of SAD - Notification No. 102/2007-Cus dated 14/09/2007 - Appellant failed to make any endorsement in the commercial invoices issued for the domestic sale that no credit of SAD of Customs levied under sub-section (5) of Section 3 of the Customs Tariff Act, shall be admissible - Held that - As is evident from the domestic sale invoices, there is no mention anywhere in those invoices of the SAD paid by the importer. Further, there is no registration number of the appellant as a cenvatable dealer mentioned in those invoices. Therefore, in terms of the Rule 9 of the Cenvat Credit Rules, 2004, the tax invoices issued by the appellant is not a cenvatable document(s) at all and hence, no credit of any import duty paid by the appellant can be taken on the strength of these invoices, notwithstanding the non-making of endorsement in this regard on the documents. Thus, the issue involved herein is squarely covered by the decision of the Larger Bench cited 2014 (8) TMI 214 - CESTAT MUMBAI (LB) . - Decided in favour of assessee.

Summary

Issues:
Refund of SAD paid by the appellant under Notification No. 102/2007-Cus, endorsement in commercial invoices for domestic sale, entitlement to claim refund, requirement of endorsement for Cenvat credit, interpretation of Notification 102/2007-Cus, applicability of Rule 9 of the Cenvat Credit Rules, 2004.

Analysis:
The appeal concerns the refund of Special Additional Duty (SAD) paid by the appellant under Notification No. 102/2007-Cus and the endorsement issue in commercial invoices for domestic sales. The lower appellate authority set aside the refund granted by the adjudicating authority due to the absence of an endorsement in the invoices stating that no credit of SAD shall be admissible. The appellant, a non-registered dealer for issuing cenvatable invoices, imported goods, paid SAD, and sold them in the domestic market after discharging Sales Tax/VAT liability. The Assistant Commissioner of Customs sanctioned the refund after ensuring that the appellant did not pass on the SAD incidence to buyers. However, the lower appellate authority focused on the lack of endorsement in the domestic sale invoices regarding SAD credit eligibility for buyers, leading to the appeal.

The appellant argued that as per Notification No. 102/2007, they were entitled to the refund since Sales Tax/VAT liability was discharged on the resale of goods in India. The appellant's invoices did not mention the SAD paid, only Sales Tax/VAT, and lacked the registration number required under the Cenvat Credit Rules for claiming credit. The issue of endorsement and credit eligibility was addressed by a Larger Bench decision, concluding that a trader-importer meeting certain conditions could avail exemption under Notification 102/2007-Cus even without an explicit endorsement on invoices. The Tribunal's decision clarified that fulfillment of exemption conditions is necessary, and the appellant's case aligned with the Larger Bench ruling, warranting the refund.

The Revenue, represented by the Additional Commissioner, echoed the lower appellate authority's stance. However, the presiding judge, after reviewing both parties' arguments, emphasized that the absence of SAD mention and registration number in the invoices rendered them non-cenvatable documents under Rule 9 of the Cenvat Credit Rules, precluding the possibility of claiming import duty credit based on those invoices. Consequently, the judge allowed the appeal, setting aside the lower authority's decision in light of the Larger Bench precedent, which directly addressed the issue at hand.

In conclusion, the judgment delves into the nuances of SAD refund entitlement, the significance of endorsements in commercial invoices, the relevance of Cenvat credit rules, the interpretation of Notification 102/2007-Cus, and the applicability of precedent in determining the appellant's eligibility for the refund. The decision underscores the importance of fulfilling exemption conditions while clarifying the specific requirements for claiming duty credit under the Cenvat Credit Rules, ultimately leading to the appellant being granted the refund based on the Larger Bench decision's guidance.