2024 (8) TMI 962 - AT - Customs

Refund of SAD - rejection of refund claims on the ground that there is mismatch between the description of goods in the bills of entry and sales invoice and that the CST/VAT discharged were less than the SAD paid - HELD THAT - The fact remains that the appellant has produced a Chartered Accountant s Certificate along with the reconciliation statement as required by Boards Circular No. 6/2008, dated 28-4-2008. In such a case the decision to discard the certificate should be based on certain incriminating and reliable documents and the reasons for disbelieving the certificate should be clearly spelt out. In the absence of such action the claim cannot be rejected. In CHOWGULE COMPANY PVT LTD VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE 2014 (8) TMI 214 - CESTAT MUMBAI (LB) , a Larger Bench of this Tribunal examined a reference of a related matter as to whether to avail the benefit of Notification No. 102/2007, the condition 2(b) of the Notification is mandatory for compliance being a trader who cleared the goods on the strength of commercial invoices. - The judgment went on to examine the genesis and object of the levy and the role of the exemption notification, which is very useful in understanding the issue and it was held that 'non-declaration of the duty in the invoice issued itself is an affirmation that no credit would be available. Therefore, non-declaration/ non-specification of the duty element as to its nature and quantum in the invoice issued would itself be a satisfaction of the condition prescribed under clause (b) of para 2 of the Notification 102/2007.' A similar view is also relevant for discrepancies noticed in the description of goods between the sales invoice and the Bill of Entry in the impugned matter as above. As rightly stated by the appellant, such minor discrepancies of description mentioned in the invoice vis- -vis the Bill of entry do not go to the root of the validity of the refund claim and are curable. Similarly the mismatch in the SAD vs VAT / CST paid caused by different rates at which the tax is paid cannot be held against the refund applicant. There is no allegation that the VAT / CST were not paid at the effective rate. The CA s Certificate along with the reconciliation statement has been prescribed in Boards Circular to provide a ledger/ document-based scrutiny of the claim and should ordinarily be relied upon to sanction the claim. The impugned order rejecting the refund claims is not proper. The impugned order is hence set aside. The appeal is allowed.

Summary

Issues:
Refund claim rejection based on mismatch between goods description in invoices and Bills of Entry, rejection due to discrepancy in VAT/CST paid compared to SAD, reliance on Chartered Accountant's certificate, interpretation of Notification No. 102/2007, validity of rejection based on minor discrepancies, significance of CA's certificate and reconciliation statement, comparison with previous judgments.

Analysis:
The appellant filed refund claims for 4% SAD paid on imports of 'Industrial Vacuum Cleaner and its spares' under Notification No. 102/2007. The lower authority rejected the claims citing discrepancies in goods description between sales invoices and Bills of Entry. The Commissioner (Appeals) upheld the rejection. The appellant argued that VAT/CST rates differ from SAD rates and relied on a judgment supporting their position. The Tribunal noted that the rejection based on description mismatch should be supported by incriminating evidence, as per Circular No. 6/2008. The Tribunal emphasized the importance of the CA's certificate and reconciliation statement in such cases.

In a related matter, the Tribunal referred to a judgment involving Notification No. 102/2007 to understand the levy of SAD and the exemption mechanism. The Tribunal highlighted the objective of SAD to balance local taxes on domestic and imported goods. It discussed the importance of details in invoices for claiming CENVAT credit and emphasized that minor discrepancies in goods description should not invalidate refund claims. The Tribunal stressed that discrepancies in SAD vs VAT/CST paid, caused by differing tax rates, should not be a basis for rejection if taxes were paid at the applicable rates.

The judgment of the Madras High Court in P.P. Products Ltd. was referenced, emphasizing the need for documentary evidence for SAD refund entitlement. The court highlighted that minor discrepancies in product descriptions should not invalidate claims if the goods are essentially the same. The court criticized rejection based on minor discrepancies and supported the reliance on CA's certificate. The Tribunal, after reviewing the documents, found the rejection of refund claims unjustified and set aside the impugned order, allowing the appeal with consequential relief. The Tribunal emphasized the importance of proper scrutiny and avoiding unjustified rejections.

In conclusion, the Tribunal overturned the rejection of refund claims based on discrepancies in goods description and VAT/CST paid compared to SAD. The judgment highlighted the significance of documentary evidence, the CA's certificate, and the objective of SAD levy under Notification No. 102/2007. The Tribunal stressed the need for a thorough review before rejecting refund claims and upheld the appeal in favor of the appellant.