2022 (10) TMI 330 - AT - Customs

Refund of SAD - service tax levied in lieu of sales tax, by way of equalisation levy under the Customs Tariff Act - Rejection on the ground that appellant have not complied with condition no. 2(b) of the said Notification r/w CBEC Circular No. 6/2008-CUS Circular No. 16/2008-CUS. - N/N. 102/2007-Cus - HELD THAT - The issue herein is squarely covered by the interpretation of the Larger Bench of this Tribunal in the case of CHOWGULE COMPANY PVT LTD VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE 2014 (8) TMI 214 - CESTAT MUMBAI (LB) in favour of the appellant-assessee, where it was held that A trader-importer, who paid SAD on the imported goods and who discharged VAT/ST liability on subsequent sale, and who issued commercial invoices without indicating any details of the duty paid, would be entitled to the benefit of exemption under Notification 102/2007-Cus, notwithstanding the fact that he made no endorsement that credit of duty is not admissible on the commercial invoices, subject to the satisfaction of the other conditions stipulated therein. The Adjudicating Authority is directed to grant the refund within a period of 60 days from the date of receipt of the copy of this order, alongwith interest as per rules - Appeal allowed.

Summary

Issues:
Refund claim rejection based on non-compliance with condition 2(b) of Notification No. 102/2007-Cus.

Detailed Analysis:
1. Refund Claim Rejection: The appellant, an importer-trader, filed a refund claim for Rs. 7,75,216 with respect to 70 Bills of Entry. The claim was rejected solely due to non-compliance with condition 2(b) of Notification No. 102/2007-Cus. This condition required the importer to specifically indicate in the invoice that no credit of the additional duty of customs levied shall be admissible.

2. Appellate Proceedings: The appellant appealed to the Commissioner (Appeals) arguing that as they resold the goods on commercial invoices with VAT payment, the endorsement required in condition 2(b) was procedural and had no material impact. The appeal was rejected, upholding the Adjudicating Authority's decision.

3. Precedent and Interpretation: The appellant cited a similar issue addressed by a Larger Bench in the case of Chowgule & Company Pvt Ltd. vs. CCE. The Larger Bench ruled that a trader-importer, even without the required endorsement on commercial invoices, would be entitled to the refund under the notification, subject to fulfilling other conditions.

4. Division Bench Views: Prior to the Larger Bench ruling, different Division Benches had conflicting views on the matter. Some held that non-compliance with condition 2(b) was a technical infraction, while others insisted on strict adherence to the condition for availing the benefit of the notification.

5. Legal Interpretation: The Larger Bench, considering apex court rulings, emphasized the distinction between procedural and substantive conditions. It concluded that denial of exemption solely based on procedural non-compliance would be unjust. Thus, a trader fulfilling the duty payment and VAT liability, despite not indicating duty details on invoices, could still claim the refund.

6. Final Decision: After considering the arguments, the Member (Judicial) allowed the appeal, setting aside the impugned order. The Adjudicating Authority was directed to grant the refund within 60 days with interest. The decision aligned with the precedent set by the Larger Bench, favoring the appellant-assessee.

In conclusion, the judgment clarifies the interpretation of conditions for claiming refunds under Notification No. 102/2007-Cus, emphasizing the importance of distinguishing between procedural and substantive requirements in such cases.