2022 (6) TMI 1091 - AT - Customs

Refusal of SAD - rejection of refund pertaining to 6 bills of entry on the sole ground that Audit objected those 6 Bills of entry as allegedly not tallying with the sale invoices - HELD THAT - The goods imported and goods sold, though are of different brand names are one and same which is verifiable from the item code and item description and such infraction of procedural technically cannot defeat the very object and purpose of exemption Notification reliance was placed on the judgment of Hon'ble Supreme Court in MANGALORE CHEMICALS FERTILIZERS LTD. VERSUS DEPUTY COMMISSIONER 1991 (8) TMI 83 - SUPREME COURT . Further, he had asked the adjudicating authority to verify the claim of refund with reference to requisite documents and pass an appropriate order. With this limited purpose matter went back to the adjudicating authority once again, whose primary duty was to verify if through documentary proof concerning import and sale of imported goods in the local market could be established and then sanction the refund as per Notification No. 102/2007. However, he had exceeded his jurisdiction in starting a de novo proceeding - Though Appellant claims that even there is no change of description of the goods imported and goods sold in the local market, which it has substantiated demonstratively during hearing of this case through documents annexed to the appeal memo from page 80 to page 95 and beyond. Further, as could be noticed from the adjudicating authority s order that unless imported goods are sold in the same condition, benefit of exemption Notification would be denied to the importer and change in the nature of goods would disentitle the importer from seeking SAD refund. On perusal of Notification No. 102/2007 no such conditionality is noticeable. Refund of SAD is primarily governed by Notification No. 102/2007 and guided by its clarificatory Circular issued from time to time. Learned Commissioner (Appeals) in the first round of litigation had already given a finding that claim of refund of applicant survives and thereafter review of the said order by the adjudicating authority in the limited remand for verification of documents so as to ascertain that the same is in conformity to law, is beyond the power of the adjudicating authority, as it can only be exercised by the appellate authority. Judicial president has been set by the Hon'ble Madras High Court in the case of JOHNSON LIFTS PVT. LTD. VERSUS ASSTT. COMMR. OF CUS. (REFUNDS) , CHENNAI 2021 (2) TMI 401 - MADRAS HIGH COURT in which it was clearly stipulated that the respondent-department is bound to accept the description of goods in the import documents as well as sale invoice to be one and the same, on the strength of the certificate/correlation statement issued by the Statutory Auditor (Chartered Accountant). Appeal allowed.

Summary

Issues:
Refusal of SAD refund to the importer by the Refund Sanctioning Authority with concurrence of the Commissioner (Appeals) in the second round of litigation.

Analysis:
In this case, the Appellant-importer filed a refund application for SAD @4% against 28 Bills of entry, out of which refund was sanctioned against 22 Bills but rejected for 6 Bills due to alleged discrepancies with sale invoices. The Commissioner (Appeals) had earlier found in favor of the Appellant, directing them to produce necessary documents for refund substantiation. However, the Appellant was unsuccessful in subsequent proceedings before the adjudicating authority and the Commissioner of Customs, leading to the current appeal.

The Commissioner (Appeals) had previously highlighted that the imported and sold goods, despite different brand names, were essentially the same, as evidenced by item codes and descriptions. The Commissioner emphasized that denying the exemption based on procedural technicalities would defeat the purpose of the exemption notification. The Appellant was instructed to provide the necessary documents for refund verification.

The adjudicating authority, in the subsequent round of proceedings, exceeded its jurisdiction by delving into matters beyond the scope of verifying documentary proof of import and sale for SAD refund eligibility. The authority's focus on CENVAT credit and eligibility requirements not specified in Notification No. 102/2007 was deemed inappropriate. The authority's insistence on goods being sold in the same condition for exemption was found to lack legal basis in the notification itself.

Refund of SAD is primarily governed by Notification No. 102/2007 and related circulars. The adjudicating authority's review post the Commissioner's favorable finding was deemed beyond its scope, as only the appellate authority can exercise such powers. The certificates correlating imported goods with sold goods, as per Circular No. 06/2008-Cus., were presented to both authorities, meeting the requirements for SAD refund proof.

The judgment cited a judicial precedent from the Madras High Court, emphasizing the importance of accepting the consistency between import documents and sale invoices, as certified by a Statutory Auditor. In line with this precedent, the appeal was allowed, setting aside the Commissioner's order and directing the Department to refund the amount with applicable interest within two months.

In conclusion, the Appellant's appeal was successful, with the order for SAD refund being upheld, emphasizing the importance of adhering to legal provisions and documentary proof requirements for such refunds.