2024 (12) TMI 1321 - AT - Customs

Refund of SAD under N/N. 102/2007 dated 14.09.2007 against Bill of Entry No. 2935961 dated 10.03.2011 - rejection on the ground that no endorsement on the sales invoices by affixing seal or stamp has been made indicating that CENVAT credit has not been availed and also the invoices did not reflect in the VAT Returns filed and, also they were not attested by the Chartered Accountant or receipt of the same have not been acknowledged by the Tax Department. Denial of refund on the ground that no endorsement on the sales invoices by affixing seal or stamp has been made indicating that CENVAT credit has not been availed - HELD THAT - The Larger Bench of the Tribunal in the case of CHOWGULE COMPANY PVT LTD VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE 2014 (8) TMI 214 - CESTAT MUMBAI (LB) had held that appellant is entitled to SAD refund even if no endorsements are made on the commercial invoices. Whether refund of SAD is admissible under Notification No.102-/2007-Cus. dated 14.9.2007 when VAT was exempted on imported goods? - HELD THAT - The issue is squarely covered by the decision rendered in appellant s own case on similar set of facts by the Chennai Bench of this Tribunal in M/S. HONDA SIEL PRODUCTS LTD. VERSUS CC, CHENNAI-IV 2018 (2) TMI 1135 - CESTAT CHENNAI referring to their earlier cases in M/S. KUBOTA AGRICULTURALL MACHINERY INDIA PVT. LTD. AND M/S. ACER INDIA PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI-IV 2017 (6) TMI 565 - CESTAT CHENNAI and M/S GAZAL OVERSEAS, M/S MAYANK ENTERPRISES, M/S ANAND ASSOCIATES VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI 2015 (12) TMI 427 - CESTAT NEW DELHI where it was held that ' what is required in terms of the said notification is payment of appropriate sales tax/VAT regardless of the rate thereof. It logically follows that if the appropriate rate of sales tax/VAT was NIL then the appropriate sales tax/VAT paid will also be NIL.' Conclusion - The appellants are entitled to SAD refund and the refund cannot be denied. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The judgment addresses the following core legal issues:

Whether the appellant is entitled to a refund of the Special Additional Duty (SAD) under Notification No. 102/2007-Cus. dated 14.09.2007, despite the absence of specific endorsements on the sales invoices.
Whether a refund of SAD is admissible under the same notification when the imported goods are exempt from VAT.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement to SAD Refund Without Endorsements on Invoices

Relevant legal framework and precedents: The legal framework is based on Notification No. 102/2007-Cus. The Larger Bench of the Tribunal in the case of Chowgule & Company Pvt. Ltd. established that endorsements on commercial invoices are not mandatory for SAD refund eligibility.
Court's interpretation and reasoning: The Tribunal interpreted that a trader-importer who has paid SAD and discharged VAT/ST liability on subsequent sales is entitled to the exemption under the notification, even without endorsements on invoices, provided other conditions are met.
Key evidence and findings: The Tribunal found that the appellant's case aligns with the precedent set by the Chowgule case, where the absence of endorsements did not preclude refund eligibility.
Application of law to facts: The Tribunal applied the precedent to the appellant's situation, determining that the lack of endorsements on invoices does not invalidate the refund claim.
Treatment of competing arguments: The Tribunal acknowledged the Revenue's argument regarding the necessity of endorsements but relied on the Chowgule precedent to refute it.
Conclusions: The Tribunal concluded that the appellant is entitled to the SAD refund without the need for endorsements on the invoices.

Issue 2: Refund Eligibility When VAT is Exempted

Relevant legal framework and precedents: The issue is governed by Notification No. 102/2007-Cus. and clarified by Circular No. 6/2008. Precedents include decisions in the cases of Kubota Agricultural Machinery India Pvt. Ltd. and Gazal Overseas.
Court's interpretation and reasoning: The Tribunal held that the exemption notification does not require the VAT rate to be equal to or higher than the SAD rate. The refund is permissible if appropriate VAT/Sales tax is paid, even if it is NIL.
Key evidence and findings: The Tribunal referenced the Circular No. 6/2008, which clarified that the refund is not restricted by the VAT rate being lower than the SAD rate.
Application of law to facts: The Tribunal applied the clarification from the circular and precedents to the appellant's case, determining that a NIL VAT rate does not preclude the refund.
Treatment of competing arguments: The Tribunal addressed the Revenue's argument that a NIL VAT rate disqualifies the refund, countering it with the circular's clarification and previous case law.
Conclusions: The Tribunal concluded that the appellant is eligible for the SAD refund even when the VAT rate is NIL.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "A trader-importer, who paid SAD on the imported good and who discharged VAT/ST liability on subsequent sale, and who issued commercial invoices without indicating any details of the duty paid, would be entitled to the benefit of exemption under Notification 102/2007-Cus., notwithstanding the fact that he made no endorsement that 'credit of duty is not admissible' on the commercial invoices, subject to the satisfaction of the other conditions stipulated therein."
Core principles established: The Tribunal established that endorsements on invoices are not a mandatory requirement for SAD refund eligibility, and that a NIL VAT rate does not preclude refund eligibility under the relevant notification.
Final determinations on each issue: The Tribunal determined that the appellant is entitled to the SAD refund, setting aside the impugned order and allowing the appeal with consequential relief.