2017 (3) TMI 1429 - AT - Customs

Refund of SAD - rejection on the ground that the appellant did not produce the sale invoices and also that the appellant did not establish that they have not taken CENVAT credit on the said SAD - Held that - The appellant is incapacitated from issuing invoices as per the provisions of composite scheme in VAT Act. While complying with one legislation, the appellant cannot be disadvantaged of the benefit which is otherwise available to them by another legislation. Thus rejecting the refund claim only on the grounds that appellants have not produced invoices to substantiate sale of the imported goods would be putting the appellant to disadvantage merely because they have complied the VAT law - the non-issuance of invoices was not a choice made by the appellant. It was a compulsion while opting for payment of composite scheme under VAT law. The second condition is that the appellant has not established that CENVAT credit has not been taken by the appellant by producing the endorsement on the invoices. Since the appellants have not issued any invoices, there is no question of making of such endorsements. The appellants have fulfilled the conditions to the extend of practically possible and therefore the rejection of refund claim is unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection based on lack of invoices and failure to establish non-availment of CENVAT credit.

Analysis:
The appellant, engaged in construction of residential buildings, imported sanitary fittings and paid Additional Duty of Customs (SAD). A refund claim of SAD paid was rejected due to missing sale invoices and failure to prove non-availment of CENVAT credit. The original authority and Commissioner(Appeals) upheld the rejection, leading to this appeal.

The appellant argued that under the composite scheme of VAT, they couldn't issue invoices but included the price of sanitary items in sale agreements. They submitted a Chartered Accountant's certificate correlating VAT and SAD payments, along with sale agreements and VAT challans. The appellant contended that due to VAT regulations, they couldn't issue invoices, thus couldn't endorse non-availment of credit on SAD. The appellant highlighted Circular No.6/2008-Cus., allowing a Chartered Accountant to certify such correlations, which was done in this case.

The respondent reiterated the rejection, emphasizing the absence of sales invoices as proof of goods sold to customers. The Department argued that without invoices, the conditions of Notification No.102/2007-Cus weren't met, justifying the refund denial.

The Tribunal noted that the appellant, operating under the composite scheme, paid VAT on the agreement value, including the imported sanitary items. The appellant couldn't issue invoices due to the composite scheme's provisions. The Tribunal cited Circular No.6/2008-Cus., stating that a Chartered Accountant could certify VAT and SAD correlation. The Tribunal found the appellant had practically fulfilled conditions, overturning the refund rejection and allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the refund rejection and granting consequential reliefs.