2016 (11) TMI 178 - AT - Customs

Refund of SAD - Notification No.102/2007-Cus. dated 14.9.2007 - In the present cases, the lower authorities have rejected the refunds since the correlation between the imported goods and those locally sold on payment of VAT has not been established beyond doubt - Held that - The Notification as well as the Circulars notified by the CBEC for such refund claims requires the submission of documents from which the correlation between the two can be established. It is on record that such documents have been submitted. The main misgiving on the part of the Revenue authorities is that the correlation cannot be established beyond doubt - It is to overcome such difficulties, that the CBEC vide their Circular dated 28.4.2008 as well as subsequent Circular dated 13.10.2008 has made the requirement that such correlation is to be examined and certified by the statutory auditor/CA after examining the books of accounts of the importer - Appeal allowed.

Summary

Issues:
Denial of refund of Special Additional Duty (SAD) of customs claimed by the appellant under Customs Notification No.102/2007-Cus. dated 14.9.2007 due to alleged lack of correlation between imported goods and local sales invoices on which VAT was paid.

Analysis:

1. Denial of Refund Claims:
The primary issue in the judgment revolves around the denial of refund claims by the appellant for the 4% of Special Additional Duty (SAD) of customs paid on imported prime reinforcing steel bars. The appellant imported goods under various Bills of Entry, paid customs duty including SAD, and subsequently sold the goods on payment of VAT. The refund claims were rejected by the original authorities and upheld by the Commissioner (Appeals), leading to the present four appeals challenging the denial of refunds.

2. Contentions of the Appellant:
The appellant, represented by a learned advocate, argued that the denial of refunds was unjustified. The appellant relied on Customs Notification No.102/2007-Cus. dated 14.9.2007, which governs the grant of refund subject to fulfilling specified conditions. The advocate highlighted that all necessary documents, as per the Notification and Circulars issued by CBEC, were submitted to the Asst. Commissioner. The main contention was the correlation between imported goods and local sales invoices on which VAT was paid. The advocate emphasized minor variations in descriptions should be accepted, supported by a certificate from a statutory auditor.

3. Revenue's Position:
On the contrary, the Departmental Representative supported the views of the lower authorities, emphasizing the need for establishing a clear correlation between imported goods and local sales invoices with VAT payment. The Revenue argued that doubts existed regarding the genuineness of the correlation, especially with rubber-stamped bill of entry details on local sale invoices. Reference was made to a Tribunal decision where the refund was rejected due to the inability to correlate final invoices with imported goods.

4. Judicial Analysis and Decision:
The Tribunal analyzed the issue of correlation between imported goods and local sales invoices for VAT payment. Customs Notification No.102/2007-Cus. aims to grant refunds when goods imported with SAD are resold in India with VAT payment. The Tribunal noted that documents establishing correlation were submitted, and the main concern of Revenue was the inability to establish correlation conclusively. Recognizing the challenge of correlating bulk imports with piece-meal local sales, the Tribunal highlighted the requirement for statutory auditor/CA certification, which was provided by the appellant. The Tribunal found the rejection of refund claims baseless and unfair, citing a precedent in favor of the appellant.

5. Conclusion:
In light of the detailed analysis, the Tribunal allowed the appeals, granting consequential benefits to the appellant. The decision highlighted the importance of establishing correlation as per the customs Notification and Circulars, emphasizing the role of statutory auditor certification in overcoming challenges related to bulk imports and piece-meal local sales. The judgment clarified the criteria for refund eligibility and underscored the need for a fair assessment of correlation between imported goods and local sales invoices with VAT payment.

This comprehensive analysis of the judgment highlights the key legal issues, arguments presented by both parties, judicial analysis, and the final decision rendered by the Tribunal.