2024 (8) TMI 1223 - AT - Customs

Refund of SAD u/s 3(5) of Customs Tariff Act, 1975 - rejection of refund claims on the ground that there is discrepancy in description of the goods imported and goods sold - HELD THAT - The issue relating to the rejection of the Special Additional Duty of Customs (SAD) refund claim alleging that there is discrepancy in in description of the goods imported and goods sold in the sales invoices when compared to the Bills of Entry 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 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. 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 lower Appellate Authority, holding that there was no correction between the imports and subsequent sales? It is held that ' the goods imported and the goods sold are one and the same and are co-relatable. 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 claim is not proper. The impugned order is hence set aside - Appeal allowed.

Summary

Issues:
1. Rejection of Special Additional Duty of Customs (SAD) refund claim due to discrepancy in description of imported goods and goods sold.
2. Interpretation of Notification No. 102/2007-Cus regarding conditions for availing benefits.
3. Validity of Chartered Accountant's certificate and reconciliation statement in refund claims.
4. Judicial precedents on the rejection of refund claims based on minor discrepancies.
5. Jurisdiction of adjudicating authority in assessing discrepancies without fraud allegations.

Analysis:

1. The appellant filed a refund claim for 4% SAD levied under Sec. 3(5) of Customs Tariff Act, 1975. The claim was rejected due to discrepancies in the description of imported goods and goods sold. The appellant submitted relevant documents, including sales invoices and VAT/CST records, to support the claim. The lower authorities rejected the claim, leading to the appeal before the Tribunal.

2. The Tribunal analyzed the issue of discrepancy in goods description and the validity of the refund claim. Referring to Notification No. 102/2007-Cus, the Tribunal emphasized the importance of Chartered Accountant's certificate and reconciliation statement in supporting refund claims. The Tribunal highlighted that rejection should be based on incriminating evidence, and discrepancies in goods description are curable and do not invalidate the claim.

3. Citing the judgment in Chowgule & Company Pvt. Ltd., the Tribunal discussed the interpretation of Notification No. 102/2007-Cus and the conditions for availing benefits. The Tribunal noted that minor discrepancies in goods description do not affect the validity of the refund claim, especially when VAT/CST payments are duly made. The Tribunal underscored the importance of relying on CA's certificate for claim verification.

4. The Tribunal referred to the Madras High Court judgment in P.P. Products Ltd., which emphasized the need for a thorough scrutiny of documents in refund claims. The Court highlighted that discrepancies in product descriptions on invoices do not necessarily invalidate the claim if the products are essentially the same. The Court questioned the jurisdiction of authorities to reject claims without fraud allegations or substantial evidence.

5. Ultimately, the Tribunal set aside the impugned order rejecting the refund claim, emphasizing that the rejection was not proper. The Tribunal allowed the appeal, providing consequential relief as per law. The decision was based on the lack of substantial grounds for rejecting the claim and the importance of considering documentary evidence in refund assessments.

This comprehensive analysis highlights the key legal issues, interpretations of relevant notifications, the significance of documentary evidence, and judicial precedents guiding the assessment of refund claims in customs matters.