2020 (2) TMI 1085 - AT - Customs

Refund of SAD - refund rejected on the ground that it was difficult for correlating the imported goods with that of the sold goods; that the respondent being a trader, there was possibility of one grade of the imported material moving faster than the other grade; that it was not possible from the description mentioned in the sales invoice to find out which grade of the imported material was exhausted or left unsold; etc. - principles of natural justice. HELD THAT - Strangely, the First Appellate Authority having observed that a personal hearing was offered on 14.03.2013 before his predecessor, still proceeded to decide the case on merit, based on the available records, without providing an opportunity to the assessee on account of change, in violation of the principles of natural justice. The Adjudicating Authority has given a categorical finding on the payment of Sales Tax/VAT as also the correlation of VAT/Sales Tax with goods sold in the Order-in-Original which is duly supported by the certificate of a qualified Chartered Accountant, which fact has not at all been disputed by the Revenue which in effect proves that the Adjudicating Authority had no such difficulties insofar as correlations, etc., are concerned. The above findings in the Order-in-Original is based on the verification of relevant documents like the invoices, Chartered Accountant s certificate, etc. There are no strength in the First Appellate Authority s rejection of the refund for want of correlation, which exercise apparently has already been carried out to the satisfaction of the Adjudicating Authority - appeal allowed - decided in favor of appellant.

Summary

Issues involved: Refund of 4% of Special Additional Duty (SAD) under Customs Notification No. 102/2007-Cus. dated 14.09.2007, as amended.

Analysis:

Issue 1: Refund of 4% SAD
The Adjudicating Authority had sanctioned the refund of 4% SAD after applying the unjust enrichment test. However, the Commissioner of Customs (Appeals) set aside the refund, alleging difficulty in correlating imported goods with sold goods, especially in cases where different grades of imported material were involved. The Tribunal referred to a previous case where it was held that rejection of refund based on discrepancies in descriptions between Bill of Entry and sales invoice was unjustified. The Tribunal also noted that the Adjudicating Authority had verified the payment of Sales Tax/VAT and correlation with goods sold, supported by a Chartered Accountant's certificate, which the Revenue did not dispute. Consequently, the Tribunal found no merit in the rejection of refund by the First Appellate Authority and set aside the impugned order, allowing the assessee's appeal with consequential benefits.

Issue 2: Violation of Principles of Natural Justice
The Tribunal observed that the First Appellate Authority decided the case on merit without providing an opportunity to the assessee for a personal hearing, which violated the principles of natural justice. This procedural irregularity was noted by the Tribunal, although the decision on the refund was primarily based on the substantive issues related to the unjustified rejection of the refund claim.

In conclusion, the Tribunal's judgment focused on the substantive issue of the refund of 4% SAD under the Customs Notification, highlighting the importance of proper verification and correlation of documents by the Adjudicating Authority. The Tribunal overturned the decision of the First Appellate Authority, emphasizing the need for adherence to principles of natural justice in such proceedings.