2024 (8) TMI 1064 - AT - Customs

Refund of Special Additional Duty of Customs (SAD) leviable under section 3(5) of the Customs Tariff Act 1975 - discrepancies on the description of the goods and the brand name not being mentioned in the invoice - non-submission of certain documents - HELD THAT - The issue relating to the rejection of the Special Additional Duty of Customs (SAD) refund claim alleging that there is mismatch with regard to the description of goods etc. in the sales invoices when compared to the Bills of Entry and other minor discrepancies is no longer res integra. The fact remains that the appellant has produced a Chartered Accountant s Certificate along with the reconciliation statement as required by Boards Circular. 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 - it was held in the case that 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. The Hon ble Madras High Court in its judgment in PP PRODUCTS LTD. VERSUS COMMISSIONER OF CUSTOMS CHENNAI SEAPORT COMMISSIONERATE-IV 2019 (5) TMI 830 - MADRAS HIGH COURT examined whether the Tribunal in the face of documentary evidence produced by the appellant was correct in setting aside the order of the Appellate Authority holding that there was no correction between the imports and subsequent sales? It held that The lower authority has not issued any DM or PH to the appellants for making the deficiencies good or to make any submissions. The department has not proved that the goods sold are different from the goods imported. The lower authority has not disputed the fulfillment of the other substantive conditions of the notification by the appellants. Rejection of partial amount of refund on this flimsy ground is not sustainable. The impugned order rejecting the refund claims is not proper. The same is hence set aside - Appeal allowed.

Summary

Issues Involved:
1. Rejection of refund claims for the 4% Special Additional Duty of Customs (SAD) due to discrepancies in invoices.
2. Validity of the Chartered Accountant's Certificate and reconciliation statement.
3. Interpretation of Notification No. 102/2007-Cus regarding the conditions for refund claims.
4. Examination of whether minor discrepancies in invoices can be grounds for rejecting refund claims.

Issue-wise Detailed Analysis:

1. Rejection of Refund Claims for 4% Special Additional Duty of Customs (SAD) Due to Discrepancies in Invoices:

The appellant, a trader-importer, filed four refund claims totaling Rs. 72,43,041/- for the 4% SAD paid under section 3(5) of the Customs Tariff Act, 1975. The claims were rejected by the refund sanctioning authority and subsequently by the Commissioner (Appeals) due to discrepancies in the description of goods and the absence of brand names in the invoices. Additionally, two different stamps were found in the invoices submitted by the appellant but were missing in the invoices received by the buyers. The appellant argued that the authorities should have disallowed the refund claims against specific bills of entry or sale invoices rather than rejecting all claims wholesale. The Tribunal found that minor discrepancies or variations in the description of goods do not justify the rejection of refund claims under Notification No. 102/2007-Cus.

2. Validity of the Chartered Accountant's Certificate and Reconciliation Statement:

The appellant submitted that all refund claims were supported by a Chartered Accountant's Certificate along with a reconciliation statement, which correlated every sale invoice with the parent bill of entry. The Tribunal emphasized that the Chartered Accountant's Certificate, along with the reconciliation statement, is required by the Board's Circular and should be relied upon unless there are incriminating and reliable documents to discard it. The Tribunal found no substantive non-compliance or doubt about the payment of customs duty or VAT on domestic sales, thus rejecting the claims based on minor discrepancies was unjustified.

3. Interpretation of Notification No. 102/2007-Cus Regarding the Conditions for Refund Claims:

The Tribunal referred to the Larger Bench decision in Chowgule & Company Pvt. Ltd. v. Commissioner of Customs & C. Ex., which examined the genesis and object of the levy of SAD and the role of the exemption notification. The exemption is provided to counterbalance the levy of local taxes on domestically produced goods and imported goods, ensuring a level playing field. The Tribunal noted that the object and purpose of the levy and the exemption should be kept in mind while interpreting Notification No. 102/2007-Cus. The Tribunal held that minor discrepancies in the description of goods between the sales invoice and the Bill of Entry do not go to the root of the validity of the refund claim and are curable.

4. Examination of Whether Minor Discrepancies in Invoices Can Be Grounds for Rejecting Refund Claims:

The Tribunal cited the Hon'ble Madras High Court judgment in P.P. Products Ltd. v. Commissioner, which held that minor discrepancies, such as the non-mentioning of grades in the sales invoices, do not justify the rejection of refund claims if the goods imported and sold are co-relatable. The Tribunal found that the adjudicating authority had not provided any material to disbelieve the Chartered Accountant's Certificate, nor had they issued any deficiency memo or personal hearing to the appellant to rectify the discrepancies. The Tribunal concluded that the rejection of refund claims on such flimsy grounds was not sustainable.

Conclusion:

The Tribunal set aside the impugned order rejecting the refund claims and allowed the appeal with consequential relief as per law. The decision emphasized the importance of relying on the Chartered Accountant's Certificate and reconciliation statement and rejected the wholesale rejection of refund claims based on minor discrepancies. The appeal was disposed of accordingly.