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TMI Blog2013 (6) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Entry. The goods, respondent deals with, are Prime cold rolled steel (in coil), electrical steel (in coil), stainless steel (in coil), flat hot/cold rolled coil of iron, non alloy, other alloy steel, etc. having more than 600 mm of width. At the time of importation such goods Special Additional Duty ('SAD' for short) was required to be paid by the respondent. The respondent claimed refund of 4% of SAD paid at the time of importation in wake of Notification No.19 of 2006 dated 1.3.2006. An exemption was also availed under Notification No.102/2007Cus dated 14.9.2007 which allowed the refund subject to certain conditions. The total number of claims made by the respondents are six on 22.4.2009. 3. On scrutiny when it was found that the goods imported and goods sold were not the same, the respondent allegedly was found not to have established the correlation between the goods imported and sold, and therefore, it was held that sale of imported goods cannot be said to be in conformity with the Notification No.102 of 2007 read with Board Circular No.6/2008Cus No.16 of 2008. 4. A show cause notice was issued on 13.7.2009 seeking to know why the refund claim should not be rejected for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with law?" 8. We have heard learned Senior Counsel Mr. R.J. Oza for the Department, who urged this Court that both, the original adjudicating authority and the appellate forum have held that though the only process made on the goods is of cutting and slitting, when imported goods changed their identity by virtue of the process undertaken by the respondent, no benefit of the notification is to be made available. He further urged the Court that the Tribunal has seriously erred in setting aside the order of the appellate forum and allowing the appeal by remanding the same to the original adjudicating authority. 9. Learned advocate Mr. H.P. Modh appearing by way of a caveat severely contested the appeal. He contended this Court that no interference is warranted as denial of the refund by the adjudicating authorities was an error quite apparent, particularly, in wake of the decision of this Court rendered in Civil Application No.220 of 2011 in Tax Appeal No.715 of 2011 on 7.7.2011 wherein on importation of timber, the only process was of cutting and sawing timber into small pieces, which was held not amounting to manufacturing process so as to attract levy as excisable goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at what is required to be seen is whether the process amounts to bringing a new article with distinct character and use and amounting change in tariff head. The Tribunal, therefore, concluded that although there remains an obligation on the part of the importer to show that he has sold the goods imported by him, the matter required remand to the original adjudicating authority to establish that the goods sold by the respondent were the imported goods, holding the respondent entitled for refund. The Tribunal discussed various judgments of different High Courts and so concluded. In the words of the Tribunal :- "15. Under these circumstances and in view of the decisions discussed above, we reach the conclusion that the appellant is eligible for refund. However, the matter is required to be remanded to the original adjudicating authority since there was no indication anywhere that the appellant fulfilled the obligation to show that the goods sold by him were the imported goods. This has happened since the lower authority has taken the view that the processing undertaken by the appellant has changed the nature of goods and therefore appellant is not eligible for the exemption on that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al duty of customs leviable thereon as applicable at the time of importation of the goods. (b) Importer, while issuing the invoices for sale of said goods, should indicate that no credit of additional duty of customs levied under subSection( 3) of Section 5 of the Customs Tariff Act, shall be admissible. (c) Importer shall file a claim of refund of such additional duty paid on imported goods with the jurisdictional customs officer. (d) Importer shall pay on sale of the said goods, appropriate sales tax or value added tax, as the case may be. (e) Importer is also required to provide copies of relevant documents, such as documents evidencing payment of the said additional duty, invoices of sale of the imported goods in respect of which refund of the said additional duty is claimed and 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. 25. On behalf of the department much stress is placed on the wordings used in the notification that the exemption would be available when goods are imported into India for subsequent sale. In the conditions required to be fulfilled also it is provided that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any Ltd. and another (supra) also the Apex Court made certain observations which are useful for our purpose, which may be reproduced as under:" 90. On turning to various dictionaries, we find that the dictionary meaning largely coincides with the statutory meaning of the word ' timber'. While discussing the question of the subjectmatter of the impugned provisions we have set out the definition of the word 'timber' contained in the Webster Collegiate Dictionary occurring in the passage from the judgment of Vivian Bose, J., in Shrimati Shantabai v. State of Bombay. The relevant meanings of the term 'timber' given in the Shorter Oxford Dictionary, Third Edition are "building material generally; wood used for the building of houses, ships, etc., or for the use of the carpenter, joiner or other artisan." This definition also states that the word is "applied to the wood of growing trees capable of being used for structural purposes; hence collectively to the trees themselves". Amongst the meanings given in the Concise Oxford Dictionary, Sixth Edition, are " wood prepared for building, carpentry, etc.; trees suitable for this; woods, forests, piece of wood, beam". One of the meanings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d timber. Such flatness and smoothness can only be achieved by using a saw and other implements required for that purpose. The same would be the case when timber is rounded or shaped. The statutory definitions of timber extracted above read along with the meaning of the word 'timber' given in different dictionaries would show that the conclusion reached by the Madhya Pradesh Hgih Court in Mohanlal Vishram v. C.S.T. and by the Andhra Pradesh High Court in G. Ramaswamy v. State of A.P. is more germane to our purpose than the two Orissa cases neither of which has referred to the statutory definition of the word 'timber' in the relevant statutes. The observation of the Orissa High Court in the case of Krupasindhu Sahu & Sons v. State of Orissa that timber in common parlance in Orissa takes within its ambit only long and big sized logs of wood ordinarily used in house construction as beams and pillars but not when timber is converted into planks, rafters and other wood products like tables and chairs cannot, therefore, be said to be correct so far as planks and rafters are concerned. In our opinion, planks and rafters would also be timber. 92. The result is that sales of dressed or siz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents, if any, may be filed by the parties. In the meanwhile, the claims of the respondents, for refund of Special Countervailing Duty, shall be processed by the Assessing Officer and the amount so due to them shall be refunded within four weeks from today, subject to the respondents furnishing bank guarantees for half of the amount to be refunded, to the satisfaction of the Assessing Officer. The guarantees shall be kept alive till disposal of these appeals. The quantum of payment of interest to the successful party shall be considered at the time of final disposal of the appeals." In light of the background above, wordings of Notification No.102 of 2007 CUS dated 14.9.2007 would be relevant and vital to be reproduced:- Special CVD Exemption to all goods when imported for subsequent sale. In exercise of the powers conferred by sub section(1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the goods falling within the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India for subsequent sale, from the whole of the additional dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales tax and VAT. On fulfilling all these conditions, the sanction for refund can be made. The most fundamental requirement, the importer is to establish is that the imported goods do not change while being sold in the local market by any process. All the requirements of the Notification thus are necessary to be established. 15. The question that arises for consideration is as to whether steel which is imported and sold in the market after its cutting and slitting, would in any manner, change its very identity and whether it would not clear the test of maintaining its original character on account of such process. As we have noted in the case of Commissioner of Customs vs. M/s. Variety Lumbers (supra), this Court has held that cutting and sawing of the timber would not change the identity of the goods imported nor would it in any manner question the correlation of the goods imported and sold. The activities undertaken by the respondent would only be of cutting imported steel vertically and horizontally before sawing, but, the said process cannot amount to the manufacturing and goods continue to remain the same. It would be appropriate to refer to the decision of Crane Betel Nut Po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o longer be regarded as the original commodity but instead is recognised as a new and distinct commodity that it can be said that a new commodity, distinct from the original, has come into being. The test is whether in the eyes of those dealing in the commodity or in commercial parlance the processed commodity is regarded as distinct in character and identity from the original commodity vide Dy. Commr., Sales Tax Board v. Pio Food Packers (1980) 3 SCR 1271 : (AIR 1980 SC 1227)." 16. The Apex Court in in the case of Commissioner of Central Excise, New DelhiI vs. S.R. Tissues Pvt. Ltd. reported in 2005(186) E.L.T. 385 (S.C.) was dealing with slitting and cutting of jumbo rolls of toilet tissue paper or aluminum to smaller tissues wherein it has held that the same did not amount to manufacture, in principle as character and use did not undergo any change on account of wounding, cutting/slitting and packing. The Court also held that mere mention of the product in a different tariff heading would not imply that the said product was obtained by process of manufacture and if the raw material in the finished products came under different headings of two different tariff headings, it canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excisable as they are mentioned in the schedule, they could not be subjected to duty as they were not goods either because they were not manufactured or having been produced or manufactured, they were not marketed or capable of being marketed. 18. In the case of Union of India v. J.G. Glass Industries Ltd., reported in 1998 (97) ELT 5, this Court has succinctly drawn a distinction between manufacture visavis process and in the course of the judgment, it has been observed as follows: "16. On an analysis of the aforesaid rulings, a twofold test emerges for deciding whether the process is that of "manufacture". First, whether by the said process a different commercial commodity comes into existence or whether the identity of the original commodity ceases to exist; secondly, whether the commodity which was already in existence will serve no purpose but for the said process. In other words, whether the commodity already in existence will be of no commercial use but for the said process. In the present case, the plain bottles are themselves commercial commodities and can be sold and used as such. By the process of printing names or logos on the bottles, the basic character of the comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng field. The new levy would not apply to crude oil, newsprint, capital goods sector under a special tariff regime or goods which are subjected to additional duties of excise in lieu of sales tax, gold and silver imported by passengers or other nominated agencies and life saving drugs that are free from the customs duties. The levy would also not apply to goods which are currently exempt both from basic and additional duties of customs. Similarly, goods imported for subsequent trading have also been left out of its purview, since they bear the burden of sales tax at the time of first sale. The new levy will also not apply to inputs imported under export promotion schemes. In addition, there may be other sectors eligible for exemptions. These would be examined and if considered appropriate notified separately." 18. As noted above, the objective is to create level playing field for the domestic manufacturers and the importer. As rightly noted by the Tribunal, domestic manufacturers are not affected by SAD as they can always avail the Cenvat Credit. The importer who sells the goods without any manufacturing process would not get any benefit of credit. Therefore, by availing the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X
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