2024 (11) TMI 742 - AT - Customs

Rejection of refund claim - parts on which SAD was paid were not sold as such but in a different form for the purpose of installation of irrigation system and for sale of goods appellant have not paid the VAT as the said goods attracts NIL rate of VAT - HELD THAT - As we find that though the appellant have given a different nomenclature while reselling the goods imported on which SAD was paid but no further process was carried out. Moreover, the parts was sold as individual by raising invoice giving details of individual parts. Under the contract of the buyer there are separate portion for sale of goods and installation of irrigation system. This claim shows that the appellant have sold the parts as such in the form it was imported therefore on this ground the rejection of refund claim is absolutely incorrect and illegal. As regard the second ground that the appellant have not paid the VAT, it is admitted fact that the goods attracts NIL rate of VAT. It is a settled law that even if the goods attracts NIL rate of VAT it is to be treated as VAT was paid appropriately therefore on this ground also the refund cannot be rejected. The appellant have not carried out any process on the parts imported which was sold as it is. In the identical case where after import of plant under project import the same was used for exhibition of EPC contract. In the case of PMC Project India Pvt Ltd., 2019 (4) TMI 1712 - CESTAT AHMEDABAD this Tribunal held that notwithstanding a composite contract with recipient assessee decides being EPC contract also supplier of all equipments for project for which goods imported, Thus, provisions of project import regulation cannot be used to interpret Notification No. 102/2007-CUS which allows refund of SAD on imported goods if same are sold subsequently on payment of VAT/Sales Tax. Accordingly, the impugned order in that case allowing refund was held sustainable. Thus the refund is admissible under Notification No. 102/2007-CUS. Contention of the department that the appellant have not paid the VAT as it attracts NIL rate of VAT - We find that this has issue been decided in number of judgments that even though the NIL rate of VAT attracts on the imported goods. The same is treated as tax paid and the condition of Notification no. 102/2007/-CUS stands complied with. In this regard following decisions support the appellant s case. In the case of Gazal Overseas this tribunal dealing with the case of goods attracts NIL rate of VAT 2015 (12) TMI 427 - CESTAT NEW DELHI held so long as appropriate VAT/Sales tax was paid, SAD refund was admissible even if the appropriate rate of sales tax/VAT was NIL then the appropriate sales tax/VAT paid will also be NIL. Thus even if the goods on which refund under Notification No. 102/2007-CUS is sought by the assessee attracts NIL rate of VAT the same is treated as payment of appropriate VAT/Sales tax therefore and condition of the Notification no. 102/2007-CUS stands complied with. As per our above discussion and findings the rejection of refund claim of the appellant by the revenue is incorrect of both the points.

Summary

Issues Involved:

1. Eligibility for refund of 4% Special Additional Duty (SAD) under Notification No. 102/2007-Cus.
2. Compliance with VAT payment conditions under the said notification.
3. Legality of reopening adjudicated refund claims.
4. Interpretation of "as such" in the context of imported goods sold without further processing.

Detailed Analysis:

1. Eligibility for Refund of 4% SAD:

The primary issue was whether the appellants were eligible for a refund of 4% SAD under Notification No. 102/2007-Cus. The department contended that the appellants were ineligible because the goods were not sold "as such" after importation, as they were used in the installation of micro irrigation systems. The appellants argued that the parts were sold without further processing, and the installation services were separately invoiced. The tribunal found that the appellants had indeed sold the parts as individual components without further processing, thus fulfilling the condition of selling the goods "as such." Therefore, the rejection of the refund claim on this ground was deemed incorrect and illegal.

2. Compliance with VAT Payment Conditions:

Another critical issue was whether the appellants complied with the VAT payment conditions under the notification, given that the goods attracted a NIL rate of VAT in Gujarat. The tribunal noted that it is a settled law that even if goods attract a NIL rate of VAT, it is considered that VAT was paid appropriately. The tribunal cited several judgments supporting this view, concluding that the appellants complied with the notification's conditions, and the refund could not be rejected on this basis.

3. Legality of Reopening Adjudicated Refund Claims:

The appellants contended that the refund applications had been sanctioned by 17 Orders-in-Original (OIOs), which had attained finality as no appeals were filed against them. The tribunal agreed, referencing the principle of res judicata, which prevents re-adjudication of settled matters. The tribunal held that the issuance of Show Cause Notices (SCNs) to re-adjudicate these refund applications was not legally sustainable without challenging the original orders.

4. Interpretation of "As Such":

The tribunal addressed the interpretation of "as such" in the context of the notification. The appellants argued that the term meant the goods should not undergo any material change, and mere repacking did not constitute a change. The tribunal agreed with this interpretation, noting that the appellants sold the parts under commercial invoices reflecting the same description as in the Bill of Entry, thus fulfilling the condition of selling the goods "as such."

Conclusion:

The tribunal set aside the impugned orders, allowing the appeals with consequential relief. It concluded that the appellants fulfilled all conditions of Notification No. 102/2007-Cus, including the appropriate payment of VAT, even if at a NIL rate, and the sale of goods "as such." The tribunal emphasized a liberal interpretation of exemption notifications once eligibility criteria are met, aligning with the principle established in previous judgments.