2023 (2) TMI 244 - HC - Customs

Grant of stay in a case as the present would be different from examining the appeal on merits - import of Solar Inverter - benefit of Notification No.12/2012-CE dated 17.03.2012 - Revenue sought for review of the order of the Commissioner, which was not accepted and finally, the order in Annexure-D was questioned before the Customs, Excise Service Tax Appellate Tribunal, South Zonal Bench, Bangalore - HELD THAT - A few grounds, both on the product and applicability of the exemption notification, have been stated by the Revenue before the Tribunal. The Tribunal is the final authority on a finding of fact. In the case on hand, the consideration that is weighed with authority or the Tribunal for granting or refusing stay is not always akin to the consideration the authorities would be taking for deciding the main case. It is appreciated that the Tribunal would have felt that the effort in disposing of the stay petition and the appeal could be the same. But what misses the attention of the Tribunal is that the argument will certainly be different in deciding a stay petition and the appeal. Though it has not been categorically stated that the appeal has been heard and disposed of along with the stay petition, from the reasons recorded by the Tribunal, we are satisfied that the appeal ought not to have been disposed for hearing and without posting the appeal for considering, disposing of the appeal is unsustainable. This material irregularity has certainly vitiated the consideration. The order under appeal warrants interference, and, accordingly, set aside. The matter is remitted to the Tribunal for consideration and disposal within three months from the date of receipt of the copy of the judgment.

Summary

Issues:
1. Interpretation of Notification No.12/2012-CE dated 17.03.2012 for exemption on imported goods described as "Solar Inverter."
2. Consideration of stay petition versus appeal on merits.
3. Application of the test for granting exemption on non-conventional energy devices.
4. Tribunal's authority in deciding stay petitions and appeals.

Interpretation of Notification No.12/2012-CE:
The case involved the interpretation of Notification No.12/2012-CE dated 17.03.2012 for granting exemption to goods described as "Solar Inverter." The Commissioner of Customs initially rejected the exemption claim, but the Commissioner of Customs (Appeals) allowed the appeal, enabling the importer to benefit from the exemption. The Tribunal later dismissed the Revenue's appeal, upholding the decision. The appellant argued that the imported product did not qualify as a Solar Power Generating System and, therefore, the importer should not be entitled to the exemption. On the other hand, the respondent contended that the product's functionality, not just the nomenclature, should determine eligibility for exemption under the notification.

Consideration of Stay Petition vs. Appeal on Merits:
The Tribunal's decision to dismiss the appeal was based on the product's functionality, which was deemed to fall within the description of a "solar power generating system" as per the notification. However, the appellant argued that the Tribunal's consideration for granting stay and deciding the appeal on merits should differ. The appellant emphasized that the Revenue had a strong case against granting the exemption, and the appeal should have been heard separately to provide a full opportunity for arguments.

Application of Test for Granting Exemption on Non-Conventional Energy Devices:
The respondent argued that the test for determining whether the imported goods merit exemption had been correctly applied by all authorities involved. It was contended that the product's functionality should be the decisive factor for granting the exemption, rather than just the nomenclature used. The respondent maintained that there was no substantial reason to interfere with the authorities' decision on the merits of the case.

Tribunal's Authority in Deciding Stay Petitions and Appeals:
The High Court noted that the Tribunal's consideration for granting stay and deciding the appeal on merits may not always align. While the Tribunal may have felt that the efforts for both were similar, the Court emphasized the different nature of arguments in a stay petition versus an appeal. The Court found that the Tribunal's decision to dispose of the appeal without a separate hearing was unsustainable and constituted a material irregularity, warranting interference. Consequently, the Court set aside the order and remitted the matter back to the Tribunal for proper consideration and disposal within three months.

In conclusion, the High Court allowed the appeal, emphasizing the need for distinct consideration of stay petitions and appeals, especially regarding the interpretation of legal provisions for granting exemptions on imported goods.