2019 (5) TMI 830 - HC - Customs

Refund of SAD - N/N. 102/2007 dated 14.09.2007 - compliance with Condition No.2 (e) (iii) of Notification - correlation of 'goods imported' versus 'goods sold in India' - discrepancy in the description of goods was in the nature of curable effect - appellant has not adopted the same code while describing the product in their sale invoices - HELD THAT - A Notification which grants refund was an exemption notification, should be construed strictly and the conditions contained should be scrupulously adhered to. There are three documents which the importer has to produce for being entitled for refund of SAD, they being, (i) document evidencing payment of the said additional duty; (ii) invoices of sale of the imported goods in respect of which refund of the said additional duty is claimed; (iii) documents evidencing payment of appropriate sales tax or value added tax, as the case may be, by the importer, on sale of such imported goods. The adjudicating authority appears to have done a thorough scrutiny of the documents and granted refund in full. In respect of the remaining portion, the only reason for rejection is that the appellant has not adopted the same code while describing the product in their sale invoices. The explanation offered by the appellant/importer is that the numbers which followed the letters HDPE/LDPE/LLDPE are relevant only for person who is importing goods from the foreign country on orders being placed by the appellant and is of no consequence on the sale while selling the product in the local market - the adjudicating authority has not come to a conclusion that the product sold was entirely different. In fact, there was nothing on record to disbelieve the Chartered Accountant's certificate which certified that both products are one and the same. If the adjudicating authority had to disbelieve such certification, then there should have been material to do so. However, the larger question would be whether at all such jurisdiction is vested with the adjudicating authority, when there is no allegation of any fraud or misrepresentation against the appellant. The finding of the Tribunal is not sustainable, considering the facts and circumstances of the case, as the adjudicating authority himself was satisfied that substantial amount of claim for refund was sustainable - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the Single Member of the Tribunal was justified in hearing the matter relating to the claim of exemption from the Special Additional Duty of Customs under Notification No.102/2007-Cus?
2. Whether the Tribunal, in the face of documentary evidence produced by the appellant, was correct in setting aside the order of the Appellate Authority, holding that there was no correlation between the imports and subsequent sales?
3. Whether the Tribunal failed to note that the Commissioner of Customs (Appeals) cannot go into the aspect of correction of 'goods imported' versus 'goods sold in India' to arrive at a contrary conclusion?

Analysis:

1. The appeal concerned the Customs, Excise, and Service Tax Appellate Tribunal's order regarding a refund claim for the Special Additional Duty (SAD) under Notification No.102/2007-Cus. The Tribunal reversed the order of the Commissioner (Appeals-II) and rejected the refund claim partially due to discrepancies in product descriptions between imports and sales.

2. The appellant/importer sought a refund for SAD paid on imported goods, which was partially accepted by the adjudicating authority. However, the claim was rejected for a portion as the product sold did not match the imported product. The Commissioner (Appeals-II) allowed the appeal, noting that the goods imported and sold were the same despite minor discrepancies in descriptions.

3. The Tribunal, upon appeal by the Revenue, held that without a clear match between the descriptions of imported goods and sales invoices, the identity of goods could not be established for refund purposes. However, the High Court found that the Tribunal erred in dismissing the Revenue's appeal and concluded that the discrepancy in descriptions was not a significant defect, especially when the imported and sold goods were essentially the same.

4. The High Court emphasized the strict interpretation of exemption notifications and the need for adherence to conditions. It noted that the importer had provided the necessary documents for the refund claim, and the discrepancy in product descriptions should not invalidate the claim, especially when there was no evidence of fraud or misrepresentation.

5. Ultimately, the High Court allowed the appeal, set aside the Tribunal's order, and restored the Commissioner (Appeals-II)'s decision in favor of the appellant. The Court found that the Tribunal's finding was not sustainable given the satisfaction of the adjudicating authority regarding the validity of a substantial portion of the refund claim.