2016 (2) TMI 97 - AT - Customs

Refund claim of 4% Additional Duty of Customs (SAD) - Notification No.102/2007 - imported timber logs were sold as cut sizes - refund was rejected in regard to timber logs sold as cut sizes on the ground that there was no correlation with the goods imported and the goods sold - Held that - the order passed by the Tribunal which was confirmed by the Hon ble High Court of Gujarat is binding even though the appeal is pending before the Hon ble Apex Court. In obedience to judicial discipline following the dictum laid in the case of M/s. Agarwalla Timbers Pvt. Ltd. & M/s. Variety Lumbers Pvt. Ltd., I find that the appellants are eligible for refund. The denial of refund is unjustified. - Decided in favor of assessee.

Issues involved:
1. Eligibility for refund of 4% Additional Duty of Customs (SAD) on imported timber logs sold as "cut sizes"
2. Interpretation of Circular No.15/2010-Cus regarding the admissibility of refund for goods sold after processing
3. Application of Customs Tariff headings to imported goods sold in altered form
4. Precedent set by the case of M/s. Agarwalla Timbers Pvt. Ltd. & M/s. Variety Lumbers Pvt. Ltd. regarding eligibility for refund
5. Binding nature of Tribunal's decision confirmed by the High Court in the absence of a stay order from the Supreme Court

Analysis:
1. The case revolves around the appellants' claim for a refund of SAD on imported timber logs sold as "cut sizes." The Department denied part of the refund, alleging that the sold timber logs did not correlate with the imported goods. The primary authority rejected the refund claim for the logs sold as "cut sizes," leading to an appeal before the Commissioner(Appeals) and subsequently before the Tribunal.

2. The rejection of the refund claim was based on a CBEC clarification stating that refunds are admissible only if the imported goods are sold without any processing. The appellants argued that cutting the timber logs into sizes was solely for transportation purposes, not altering the nature of the imported goods. They cited invoices and referred to a relevant decision in M/s. Agarwalla Timbers Pvt. Ltd. case to support their claim.

3. The Respondent contended that the timber logs were imported under one Customs Tariff heading but sold after processing under a different heading, changing the identity of the goods. They argued that the exemption under the notification applied only if the imported goods were sold in the same physical form, justifying the rejection of the appellant's claim by the authorities.

4. The Tribunal analyzed the issue of eligibility for refund concerning timber logs sold as "cut sizes." Referring to the M/s. Agarwalla Timbers Pvt. Ltd. case, the Tribunal highlighted that even if timber was sawn and sold, eligibility for a refund existed if sales tax liability was discharged. The Tribunal's decision was upheld by the High Court and the Supreme Court directed processing of refund claims with a bank guarantee, pending a final decision.

5. In light of the binding nature of the Tribunal's decision confirmed by the High Court, the Tribunal found the appellants eligible for a refund. Despite the pending appeal before the Supreme Court, the Tribunal, following judicial discipline, allowed the appeals, setting aside the impugned order and granting consequential relief to the appellants.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's decision regarding the eligibility for a refund of SAD on imported timber logs sold as "cut sizes."

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