2014 (2) TMI 1060 - AT - Customs

Recovery of refund claim - Notification No. 102/2007, dated 14-9-2007 - recovery of refunded SAD on the ground that set top boxes were not sold as such but were assembled with other items and hence the said set top boxes were used for process of manufacture - Held that - set top boxes were sold at a value lesser than the landed cost. However, full sales tax stand paid on the sale value - Even if the sales tax was paid on the lesser value, the Customs authorities have no jurisdiction to decide on the same and it is only the sales tax authorities who can dispute the quantum of sales tax paid on the goods. There being no such objection by the sales tax authorities, the Customs have to only satisfy themselves about the payment of sales tax and not about the correctness of the same - though the value of set top boxes was on the lower side the rate of sales tax discharged by them was 12.5% as against 4% SAD and as such more quantum of sales tax stand paid by them. Only condition of the notification in question is payment of appropriate VAT or sales tax. They are not having jurisdiction to go into the question of correctness of sales tax paid by the assessee. Inasmuch as the appellants had admittedly paid sales tax in the present case - invoices issued by the appellants, admittedly had packing list annexed to the same and STB was one of the items mentioned therein. As such, absence of specific mention of the same in the invoice cannot be held to be a ground for denial of benefit inasmuch as the same is in the nature of a technical procedural objection - Stay granted.

Summary

Issues:
1. Confirmation of demand against the appellant for recovery of refund claim granted.
2. Allegations of set top boxes not sold 'as such' but used for manufacturing.
3. Jurisdiction of Customs to decide on sales tax paid by the appellant.
4. Requirement of specific mention of set top boxes in the invoices for refund claim.

Analysis:
1. The Commissioner confirmed a demand against the appellant for recovery of a refund claim granted, alleging that set top boxes were not sold 'as such' but used for manufacturing. The impugned order dropped a part of the demand as barred by limitation and did not impose any penalty. However, a part of the demand was confirmed on the ground that appropriate VAT was not paid on the goods and the invoices did not mention set top boxes separately.

2. The appellant contended that the Customs authorities lack jurisdiction to decide on the correctness of sales tax paid and that only the sales tax authorities can dispute the amount paid. The appellant argued that even if sales tax was paid on a lesser value, the Customs authorities should only verify the payment, not the correctness. The appellant highlighted that the sales tax rate paid was higher than the Special Additional Duty (SAD) rate.

3. The Circular No. 6/2008-Cus clarified that the exemption under Notification No. 102/2007 requires the payment of appropriate VAT or sales tax, without specifying a minimum rate. The Tribunal noted that as long as sales tax was paid, the Customs authorities had no jurisdiction to question the amount paid. The Tribunal found merit in the appellant's argument and rejected the Revenue's objection.

4. Regarding the requirement of specific mention of set top boxes in the invoices, the Tribunal observed that the packing list attached to the invoices clearly mentioned the set top boxes. The absence of specific mention in the invoices was considered a technical procedural objection, and the Tribunal held that the benefit should not be denied based on this ground.

In conclusion, the Tribunal allowed the stay petition unconditionally, finding that the appellant had a good prima facie case in their favor. The judgment emphasized the jurisdictional limits of Customs authorities, the payment of appropriate taxes, and the technical nature of procedural objections in claiming refunds.