2024 (4) TMI 694 - AT - Customs

Recovery of SAD refund sanctioned erroneously - benefit of N/N. 102/2007-Cus dated 14.09.2007 denied - mis-match between the imported goods and sale of imported goods - purchase of wooden logs but sale after processing i.e. in sawn sized - As per the department since the imported goods were not sold as such the refund is not admissible - Extended period of Limitation - HELD THAT - Obviously when the form of the wooden timber is changed the description and quantity will be different in the sale invoice as compared to the bill of entry. However, there is no allegation of the department that the goods sold by the appellant is not imported goods but some different goods. Therefore, so long the same imported goods have been sold due to minor difference in the details will not jeopardise the substantial benefit of the refund to the appellant. The main condition for granting the refund is that the importer should pay the VAT/sales tax which is not under dispute. Therefore, the SAD paid in lieu of sales tax has to be refunded. The main reason for difference of description is that the timber logs imported have undergone the process of sawing and sawn timber was sold. This issue has been raised against various importers of timber logs and in some of the cases the Tribunal has held that merely because the timber log is converted into sawn timber and the same has been sold, the benefit of the N/N. 102/2007-Cus cannot be denied. As regard other discrepancies raised by the department, the difference in description and certain other details does not prove that the goods sold by the appellant on which Notification No. 102/2007 was availed is not for the imported goods but for some other goods. Therefore, due to minor difference of details between the invoice and bills of entry is at the most merely a procedure lapse which does affect the vital facts that the SAD was paid by the importer and against sale of the said goods the appellant has discharged the VAT/sales tax, therefore, there is no concrete reason for denial of the refund. Extended period of Limitation - HELD THAT - Admittedly the show cause notice has been issued after one year from the date of sanction of refund. The refund was sanctioned by the sanctioning authority after due verification of all the documents and if there is any difference of description, it was found that the same is not a forgery with intention to defraud the government. Therefore, it cannot be said that the appellant have suppressed the facts or mis-represent with intention to evade payment of duty. In this fact, the judgments cited by the appellant in the case of Tamil Nadu Housing Board 1994 (9) TMI 69 - SUPREME COURT directly supports their case on limitation. Accordingly, the demand is not sustainable on limitation also. The demand for recovery of refund already sanctioned is not sustainable. Hence, the impugned order is set aside - Appeal allowed.

Summary

Issues Involved:

1. Denial of Notification No. 102/2007-Cus benefits due to processing of imported goods.
2. Non-declaration on invoices regarding SAD credit.
3. Alleged submission of incorrect invoices.
4. Demand for recovery of refund without challenging the original refund order.
5. Limitation period for issuing the show cause notice.

Summary:

1. Denial of Notification No. 102/2007-Cus Benefits:
The appellant's refund claim for special additional duty (SAD) was initially sanctioned but later challenged by the department on the grounds that the imported wooden logs were sold after processing into sawn timber. The appellant argued that the issue is no longer res-integra, citing various judgments, including *Variety Lumbers - 2018 (360) ELT 790 (SC)*, which upheld that the benefit of Notification No. 102/2007-Cus cannot be denied even if the imported goods are sold after processing.

2. Non-declaration on Invoices Regarding SAD Credit:
The department also contested the refund on the basis that the appellant did not declare on the invoices that no credit of additional duty under Section 3(5) of the Customs Tariff Act, 1975 is available. The appellant countered that they are not registered dealers authorized to issue cenvatable invoices and that the invoices did not indicate SAD paid, fulfilling the objective of para 2(b) of the Notification. Judgments such as *Commissioner vs. Kohler India Corporation Pvt. Ltd - 2012-TIOL-182-CESTAT-BANG* were cited to support this argument.

3. Alleged Submission of Incorrect Invoices:
The department alleged that the appellant submitted incorrect invoices, with discrepancies in the description of timber, endorsement on the invoice, and number of pieces. The appellant argued that these alterations were immaterial as the VAT was paid on the sale price of the timber, and there was no malafide intention. They referenced *Parminder Kaur vs. State of UP AIR 2010 SC 840* to assert that not every alteration amounts to forgery.

4. Demand for Recovery of Refund Without Challenging the Original Refund Order:
The appellant contended that the demand for recovery is not maintainable since the original refund order was not appealed by the department, making it final. They cited *Priya Blue Industries Pvt Ltd vs. Commissioner - 2004 (272) ELT 145 (SC)* among others to support this claim.

5. Limitation Period for Issuing the Show Cause Notice:
The appellant argued that the demand is barred by limitation as the show cause notice was issued more than one year after the refund. They maintained that the larger period for demand is applicable only in cases of suppression, misrepresentation, collusion, or fraud, none of which were present. The case of *Tamil Nadu Housing Board vs. CC, Madras - 1994 (74) ELT 9 (SC)* was cited to support their argument on limitation.

Conclusion:
The Tribunal found that the refund was correctly sanctioned, and the discrepancies pointed out by the department were minor and procedural. The primary condition for refund, payment of VAT/sales tax, was met. The Tribunal held that the demand for recovery of the refund was not sustainable, both on merits and on the ground of limitation. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.