2021 (7) TMI 100 - AT - Customs

Refund of additional duty - rejection of refund claim on the ground of failure to fulfill the Condition D of N/N.102/2007-C dated 14.09.2007 - HELD THAT - The appellant has imported the Sappan Billets (Caesalpinea sappan) and has cut them into small pieces for the purpose of marketing locally but the said cutting into smaller pieces does not change the identity of the goods and further no new product has come into existence. The identical issue has been considered by the Division Bench of the Tribunal in the case of Agarwalla Timbers Pvt.Ltd. 2010 (9) TMI 950 - CESTAT AHMEDABAD wherein it has been held that mere cutting of large pieces into small pieces for the purpose of trade will not amount to manufacture or processing in order to deny the benefit of 4% additional duty. The Division Bench of the Tribunal has considered the conditions of the Notification as well as the Circular issued by the Board and has also considered other decisions of the Tribunal wherein it has been held that mere cutting of the imported goods into small pieces will not amount to manufacture and refund of additional duty under N/N.102/2007 cannot be denied. The impugned order holding that the appellant has violated the Condition D of the N/N. 102/2007 dated 14.09.2007 is not sustainable - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection based on non-compliance with Notification No.102/2007-C Condition D.

Analysis:
The appellant imported Sappan Billets and filed for a refund under Notification No.102/2007-C, which was rejected by the Commissioner of Customs (Appeals) Cochin for not fulfilling Condition D. The appellant argued that cutting the imported goods into smaller pieces for local marketing did not change the identity of the goods or constitute a manufacturing process, citing relevant legal precedents. The Commissioner upheld the rejection, stating the nature of the goods had changed. The appellant relied on decisions by CESTAT Ahmedabad and the High Court of Ahmedabad to support their claim, emphasizing that cutting into smaller pieces did not create a new product. The Tribunal found that the cutting did not alter the goods' identity, echoing the stance taken in previous cases and court decisions.

The respondent contended that the appellant's actions constituted a manufacturing process, referencing a case where goods were processed before sale, thus denying the refund under the Notification. They cited a decision by the Hon'ble Gujarat High Court and a Circular to support their argument. After considering both parties' submissions and reviewing the case records, the Tribunal determined that cutting the imported goods into smaller pieces for local marketing did not change the goods' identity or create a new product. The Tribunal referenced previous decisions by CESTAT and the Hon'ble Gujarat High Court, emphasizing that the appellant's actions did not amount to a manufacturing process, contrary to the respondent's argument.

The Tribunal highlighted a decision by the Hon'ble Apex Court affirming the view that converting imported logs into sawn timber without altering the original product's identity did not disqualify the importer from benefiting from the exemption notification. The Tribunal noted inconsistencies in the Commissioner's decisions in similar cases and distinguished the cases cited by the respondent, concluding that the appellant's situation aligned with the legal precedents supporting their claim. Consequently, the Tribunal set aside the Commissioner's order, allowing the appeal and granting any consequential relief due to the appellant.