2016 (10) TMI 861 - AT - Customs

Refund of SAD - N/N. 102/2007 dated 14.09.2007 - import of set top boxes on payment of applicable customs duty, additional duty, educational cess and also special additional duty on the STBs on the basis of declared retail sale price (RSP) - whether claim for refund of SAD on set top boxes justified? - recall of the sanctioned refund by a proceeding under Section 11A - Held that - reliance placed on the decision of Eveready Industries Ld. Vs CESTAT 2016 (4) TMI 688 - MADRAS HIGH COURT where it was held that the Hon ble High Court has faulted the Department for recall of the sanctioned refund by a proceeding under Section 11A without reviewing refund sanction order under Section 35E. Inasmuch as we are convinced that the refund sanctioned is proper, we do not consider it necessary to discuss this ground. Refund sanctioned - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Import of set top boxes and subsequent sale in the domestic market.
2. Allegations of incorrect refund claims and VAT payment.
3. Application of Notification No. 102/2007 for exemption from SAD.
4. Challenge to impugned order recalling refund amounts.

Analysis:

Issue 1: Import and Sale of Set Top Boxes
The appellant imported set top boxes (STBs) and sold them in the domestic market as part of antenna systems and accessories. The Revenue alleged that the appellant did not sell the STBs as imported and undertook manufacturing, resulting in a new product. However, the Commissioner found no evidence of manufacturing by the appellant and still recalled the refund. The invoices described the goods as antenna systems, but the packing list clearly showed the inclusion of STBs. Verifications with buyers confirmed the presence of STBs in the packages. The appellant's contention that the STBs were sold on payment of appropriate VAT was supported by the refund sanctioning authority's verification of documents.

Issue 2: Allegations of Incorrect Refund Claims and VAT Payment
The Revenue alleged that the appellant did not pay appropriate VAT on the imported STBs as the selling price was lower than the declared RSP at the time of import. However, the appellant argued that the total VAT paid on the STBs was higher than the SAD paid on import. The Ministry of Finance's circular clarified that the exemption under Notification No. 102/2007 did not require VAT to be equal to or higher than the customs duty paid. The Tribunal found no grounds to deny the refunds based on the VAT payment.

Issue 3: Application of Notification No. 102/2007
The Notification provides for exemption from SAD if imported goods are sold in the domestic market on payment of appropriate VAT. The appellant claimed refunds of SAD paid on imported STBs, which were initially sanctioned by the Assistant Commissioner. The subsequent recall of refunds was based on allegations of incorrect sale descriptions and VAT payment. The Tribunal held that the refunds were valid as the imported STBs were sold in the domestic market with appropriate VAT payment.

Issue 4: Challenge to Impugned Order Recalling Refund Amounts
The appellant challenged the impugned order on grounds that the STBs were sold with appropriate VAT payment, and the descriptions in invoices and packing lists matched. The Tribunal, after considering the arguments and evidence presented, set aside the impugned order and allowed the appeal, providing consequential benefits to the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that the imported STBs were sold in compliance with Notification No. 102/2007, and the VAT payment was deemed appropriate. The recall of refund amounts was found unjustified, and the appeal was allowed with consequential benefits.