2018 (7) TMI 350 - AT - Customs

Refund of SAD - N/N. 102/2007-CUS dated 14.09.2007 - The rice bran which the assessee has imported has been processed to extract rice bran oil and the de-oiled rice bran is separately sold by the appellant - whether the rice bran and the extracted rice bran oil are one and same commodity to avail benefit of notification? Held that - Notification No. 102/2007-CUS exempts goods falling within First Schedule of Customs Tariff Act, when imported into India for subsequent sale from the whole of Additional Duty of Customs leviable therein under Sub-Section (v) of Section 3 of Customs Tariff Act - As may be seen in para 2 (d) of the notification, the importer shall sell the imported goods after paying appropriate sales tax or VAT as the case may be. In this case the imported goods were not sold. Imported goods were processed into two different distinctive commodities and they were sold separately - The bran which is imported is a distinct commodity than the bran oil and the de-oiled bran and accordingly, the market prices of these three commodities are also different. This case has far more similarities to the case of the Proflex Systems Vs. Commissioner of Customs, Ahmedabad 2014 (5) TMI 123 - CESTAT AHMEDABAD in which corrugated sheets were imported but they were sold as Proflex Roofs after making some changes. It is a well settled position that the exemption notification is an exception to the general rule and has to be strictly construed. The rice bran which the assessee has imported has been processed to extract rice bran oil and the de-oiled rice bran is separately sold by the appellant. Goods which were imported were not sold but were processed. Therefore, the exemption under Notification No.102/2007-CUS and the consequential SAD refund do not apply in the present case - refund not allowed - appeal dismissed - decided against appellant.

Summary

Issues:
- Interpretation of Notification No.102/2007-CUS regarding refund of Special Additional Duty (SAD) on imported goods sold after processing.
- Comparison of cases where SAD refund was allowed for processed goods with the present case involving imported rice bran and de-oiled bran.
- Application of legal principles in determining eligibility for SAD refund based on the nature of processing and sale of goods.

Analysis:
1. The main issue in this case revolves around the interpretation of Notification No.102/2007-CUS concerning the refund of Special Additional Duty (SAD) on imported goods sold after processing. The appellant imported rice bran, extracted bran oil, and separately sold the de-oiled bran. The contention was that both de-oiled bran and rice bran are similar products used as fodder and should be eligible for SAD refund under specific conditions mentioned in the notification.

2. The appellant argued that previous cases where SAD refund was allowed for processed goods supported their claim. They cited cases like Aggarwalla Timbers Pvt Ltd. and Commissioner of Customs Vs. Chennaiversusshri Ram Impex India Pvt Ltd. to demonstrate that processing imported goods did not disqualify them from SAD refund.

3. The Departmental Representative opposed the appeal, emphasizing the distinction between the imported goods and the processed products sold by the appellant. They relied on the case of Proflex Systems where the Tribunal rejected a similar claim, stating that what was sold differed from the imported goods, leading to the denial of SAD refund.

4. The Tribunal analyzed the conditions laid down in Notification No.102/2007-CUS, particularly para 2(d) requiring the importer to sell the goods after paying appropriate sales tax or VAT. The Tribunal concluded that the imported rice bran had been processed into distinct commodities (bran oil and de-oiled bran) and sold separately, making them ineligible for SAD refund under the notification.

5. In applying legal principles, the Tribunal highlighted the importance of strict construction of fiscal legislation, citing the case of Ranbaxy Laboratories Ltd Vs Union of India. The Tribunal concluded that the appellant's processing of imported rice bran into bran oil and de-oiled bran did not meet the conditions for SAD refund under the notification, leading to the rejection of the appeals.

6. Ultimately, the Tribunal upheld the Orders-in-Appeal, emphasizing the distinction between the imported goods and the processed commodities sold by the appellant. The decision was based on the specific processing and sale activities conducted by the appellant, which did not align with the requirements for SAD refund under Notification No.102/2007-CUS.

7. The judgment underscores the importance of adhering to the conditions specified in exemption notifications and the need for a clear distinction between imported goods and processed products when claiming SAD refund. The decision provides a detailed analysis of the legal principles and precedents guiding the interpretation of such notifications in the context of processed goods sold after importation.