2016 (4) TMI 52 - AT - Customs

Attraction of Section 26(3) of the Customs Act, 1962 - Import of red chilli chatka seasoning and magic masala seasoning - not allowed for clearance as the individual packs in which the goods were packed did not have the labelling of the contents and therefore, re-exported after paying redemption find and penalty and sought refund of duty paid but rejected on the ground under Section 26A(3) of the Act - Held that - the primary adjudicating authority had not rejected the refund claim on the ground of goods being perishable and therefore the stand taken by Revenue that the goods were perishable seems to be untenable, more so when FSSAI or any other agency did not declare the goods to be so. Further, even if this ground is taken for consideration, there is no evidence furnished by Revenue that the goods had exceeded their shelf-life. Therefore, Section 26(3) of the Customs Act, 1962 is clearly not invocable here. Attraction of Section 26A(1) of the Customs Act, 1962 -Held that - as regards the ground of proviso 3 of Section 26A(1), revenue certainly has a point that an offence appears have to have been committed under this act as goods were re-exported on redemption fine and penalty. However, the provisions of Section 26A(1) apply to situations where the goods are capable of easily identified as imported and cleared on payment of duty for home consumption but here the goods were never cleared for home consumption. Therefore, Section 26A(1) ibid is also not attracted. - Decided against the revenue

Summary

Issues:
Refund claim rejection based on Section 26A(3) of the Customs Act, 1962 and proviso 3 of Section 26A(1) - Appeal by Revenue against Order-in-Appeal allowing the refund claim.

Analysis:

Refund Rejection under Section 26A(3) of the Customs Act, 1962:
The respondent imported goods requiring a 'No Objection Certificate' from FSSAI, which was not obtained due to labeling issues. The goods were re-exported on redemption fine and penalty, and a refund claim was made. The primary authority rejected the refund based on Section 26A(3) stating no refund for perishable goods or those exceeding shelf life. The Commissioner (Appeals) overturned this, noting FSSAI did not certify the goods as perishable. The appellate authority found the rejection on perishability grounds erroneous, as there was no evidence of shelf-life expiration or FSSAI certification, making Section 26A(3) inapplicable.

Refund Rejection under Proviso 3 of Section 26A(1):
The Revenue argued that an offence was committed as goods were re-exported on penalty, invoking proviso 3 of Section 26A(1. However, the tribunal noted Section 26A(1) applies to goods cleared for home consumption, which was not the case here. The goods were never cleared for home consumption, rendering Section 26A(1) inapplicable. The tribunal found both grounds of Revenue unsustainable and dismissed the appeal, emphasizing the goods were not declared perishable, lacked evidence of exceeding shelf life, and were not cleared for home consumption, thus not falling under the purview of the cited provisions.

This detailed analysis highlights the tribunal's reasoning behind dismissing the Revenue's appeal against the Order-in-Appeal allowing the refund claim, addressing each issue raised by the Revenue regarding the rejection of the refund claim under Section 26A(3) and proviso 3 of Section 26A(1) of the Customs Act, 1962.