2023 (7) TMI 324 - AT - Customs

Refund of SAD - interpretation of Notification No. 21/2012-Cus. dated 17.03.2012 - Revenue entertained a doubt that the goods imported by the assessee-respondent did not appear to be meant for retail sale - goods imported can be considered to be a pre-packaged commodity in terms of the provisions of the Legal Metrology Act or not - HELD THAT - There are clearly buyers, identified or otherwise, for the pre-packaged goods; there is no dispute that such pre-packaged goods were sold by the importer to the buyers/resellers and that MRP/RSP labelling was witnessed by the proper officer at the Customs notified area - there are no disputes to the factual position taken out either in the grounds-of-appeal or even in the impugned Order-in-Original, except as per paragraph 13 of this order, and therefore, it is held that the importer has satisfied the conditions of Notification No. 21/2012-Cus. ibid. It is noticed that in the earlier paragraphs of this order that the levy of SAD is to counterbalance the State levies in the form of VAT / ST / CST. This means that the importer is normally liable to pay SAD at the time of import; when such goods imported are subsequently sold locally on payment of applicable VAT / ST / CST, the whole of the SAD that was levied on such imported goods could be claimed as refund by the importer. This is the scheme incorporated in Notification No. 102/2007-Cus. dated 14.09.2007, which was intended to provide a level playing field to importers/traders who clear goods against payment of SAD vis- -vis manufacturers, who did not pay SAD while manufacturing the goods domestically and thereby to remove the burden of double taxation on such importers. The above Notification underwent subsequent amendments. Extended period of limitation - HELD THAT - By virtue of the above counterbalancing act, there is no loss to the exchequer and therefore, the issue is clearly revenue neutral. This will definitely have a bearing on the allegations as to suppression of facts, etc., for invoking the extended period of limitation - Hence, it is not only on the issue of revenue neutrality, but also on the point of invocation of extended period of limitation, apart from merits, that the Revenue has to fail. Thus, it is clear that the Department was aware as to what was being imported and the purpose and hence, there was nothing that was suppressed , more so, to evade payment of duty. There are no infirmity in the impugned order and therefore, the same does not call for any interference - appeal of Revenue dismissed.

Summary

Issues Involved:
1. Eligibility for exemption from 4% Special Additional Duty (SAD) under Notification No. 21/2012-Customs.
2. Allegations of misstatement and suppression of facts by the importer.
3. Invocation of the extended period of limitation for demand of customs duties.

Summary:

Issue 1: Eligibility for Exemption from 4% SAD
The appellant imported storage hardware and claimed exemption from 4% SAD under Notification No. 21/2012-Customs dated 17.03.2012. The Revenue doubted the eligibility, arguing the goods were not for retail sale but were customized for specific buyers and sold through tenders. The Tribunal found that the importer satisfied the conditions of the notification: the goods were pre-packaged, intended for retail sale, and had the required retail sale price (RSP) labels affixed. The Tribunal noted that the goods were sold locally in pre-packaged condition with applicable VAT/CST paid, thus meeting the notification's requirements.

Issue 2: Allegations of Misstatement and Suppression
The Revenue alleged that the importer suppressed facts and misled authorities to avail of the SAD exemption. The Tribunal rejected this, noting that the importer declared the goods correctly, complied with MRP labeling requirements, and obtained necessary permissions from customs authorities. The Tribunal emphasized that the goods were inspected by customs officers, and there was no evidence of deliberate suppression or misstatement.

Issue 3: Invocation of Extended Period of Limitation
The Revenue invoked the extended period of limitation under Section 28(4) of the Customs Act, 1962, alleging willful misstatement and suppression of facts. The Tribunal found no basis for this, as the importer had declared the goods accurately and complied with all regulatory requirements. The Tribunal highlighted that the issue was revenue-neutral, as the SAD paid at import could be claimed as a refund upon local sale with VAT/CST payment, negating any intent to evade duty.

Conclusion:
The Tribunal upheld the impugned order, dismissing the Revenue's appeal. It concluded that the importer met all conditions for SAD exemption, there was no suppression of facts, and the demand was time-barred. The appeal was dismissed, affirming the importer's compliance with the notification and regulatory requirements.