2024 (8) TMI 162 - AT - Customs

Refund in terms of Notification No. 102/2007-Cus dated 14.9.2007 - rejection on the ground of lack of endorsement regarding the ADC not being made on the sales invoices - strict compliance (revenue) Vs substantial compliance (appellant) of refund procedures - HELD THAT - The Hon ble Supreme Court in CCE VERSUS M/S HARI CHAND SHRI GOPAL 2010 (11) TMI 13 - SUPREME COURT , held that a plea of substantial compliance cannot be taken if a clear statutory prerequisite which effectuates the object and the purpose of the statute has not been met. However, if the requirements are procedural or directory in that they are not of the essence of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. The refund claim in this case is the result of an import duty exemption given by way of a conditional refund, post the import of goods. The post import procedure framed is more suited to the needs of a manufacturer importer. Some procedural relaxation can be provided to an importer trader provided that a verification is made about the claim - The certificate can be challenged, and the refund applicant confronted if discrepancies are found on a test check or otherwise, which shows that the certificate is not truly reflective of its contents and that the object and the purpose of the notification has not been met. The exemption is available to importers with the object that the 4% Additional Duty of Customs being refunded is not also availed as credit by the buyer of the goods, thereby causing a loss to the exchequer by way of a double benefit. This issue was examined by a Division Bench of this Tribunal in Novo Nordisk India Pvt. Ltd. 2013 (11) TMI 756 - CESTAT MUMBAI where it was held that 'It is a settled position in law that, substantive benefit of an exemption notification should not be denied on the ground of procedure or technical infraction.' In this case the major discrepancy pointed out was that in the CA s certificate there is a non-mention of the period particulars to determine whether certificate pertains to the Bills of Entry under this refund claim. This doubt was easily verifiable by the department by writing to the CA or by physical verification. Rejecting a claim on this basis and due to certain procedural discrepancies, would be harsh. Further it is a well-accepted norm of judicial discipline that a Bench of lesser strength must follow the decision of the Bench of larger strength. The impugned order is set aside - appeal allowed.

Summary

Issues:
Question of strict compliance vs substantial compliance of refund procedures.

Analysis:
The appellant filed a refund claim for 4% Additional Duty of Customs (ADC) paid for importing Galvanized Steel Coils/Strips. The claim was rejected due to discrepancies, including lack of endorsement on sales invoices regarding inadmissibility of CENVAT credit, missing grade and coating particulars, and absence of sizes of imported goods on some invoices. The appellant argued that as traders, they are not registered with Central Excise Authorities and cannot issue CENVAT invoices. They contended that the purpose of the exemption was to ensure no double taxation on imported goods. The appellant cited various judgments supporting their position. The Tribunal noted the issue of strict vs substantial compliance, emphasizing that essential statutory prerequisites must be met. However, procedural requirements can be fulfilled through substantial compliance.

The Tribunal examined the post-import procedure for import duty exemption, noting that some relaxation could be provided to importer traders with proper verification. The submission of a Chartered Accountants (CA) Certificate was prescribed by the revenue for verification purposes. The Tribunal highlighted that the exemption aims to prevent double benefits, where the buyer claims credit while the seller seeks a refund. Citing a previous case, the Tribunal emphasized that the object and purpose of the declaration should guide the refund eligibility. In this case, the major discrepancy was the lack of period particulars in the CA's certificate, which could have been easily verified by the department. Rejecting the claim solely on procedural grounds was deemed harsh, and the Tribunal emphasized following previous decisions and principles of judicial discipline.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, stating that the appellant is eligible for consequential relief. The decision was pronounced in open court on 02.08.2024.