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TMI Blog2020 (11) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... TIMBERS (P) LTD., MITTAL TIMBERS PRODUCTS (P) LTD., VARIETY LUMBERS (P) LTD. AND ASHIRWAD IMPEX (P) LTD. VERSUS CC [ 2013 (11) TMI 1013 - GUJARAT HIGH COURT] had held that the assessee was eligible for refund of SAD paid on imported timber logs even if the logs were cut to size for subsequent sale. The appeal filed by the Department against the said decision of the Hon ble Gujarat High Court was dismissed on merits, affirming the view taken by the Hon ble High Court, in COMMISSIONER OF CUSTOMS VERSUS VARIETY LUMBERS PVT. LTD. [ 2018 (6) TMI 1499 - SUPREME COURT] - Thus, the rejection of refund claim alleging that the goods were not sold as such is unsustainable in law. Time Limitation - ground for rejection of refund is that the refund claims were filed beyond one year from the date of payment of SAD and therefore, are barred by limitation - HELD THAT:- Sub-clause (c) of the Notification, as reproduced in paragraph 6.1 of this order, would show that the refund claim has to be filed before the expiry of one year from the date of payment of additional duty of Customs - The issue of time limit for filing refund claim was subject matter of litigation before the Hon ble High court of De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been re-packed, fumigated and affixed with brand name and not sold "as such". Penalty under Section 114AA of the Customs Act, 1962 was also imposed. On appeal, the Commissioner (Appeals) vide order impugned herein upheld the same. Aggrieved, the appellant has preferred the present appeal before this forum. 2.1 Shri B.L. Narasimhan, Learned Counsel appearing on behalf of the appellant, made various submissions, which can be broadly summarized as under : (i) During the period in dispute, the appellant had filed a total of 23 SAD refund claims for an amount of ₹ 5,90,67,534/-, whereas, what has been taken on record is only the refund claims for an amount of ₹ 5,42,34,576/-. That the appellant ought to be allowed the refund claim for an amount of ₹ 5,90,67,534/-; (ii) There is no requirement in Notification No. 102/2007-Cus that the goods have to be sold "as such". This requirement is being read into the Notification by the Commissioner (Appeals), which is impermissible. He further submitted that the expression "as such" was used only in the erstwhile Notification No. 56/1998-Cus. dated 01.08.1998 and not in Notification No. 102/2007-Cus; (iii) A comparison ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the decision of the Tribunal in the case of M/s. Kanam Latex Industries (P) Ltd. v. Commissioner of Cus., Tuticorin reported in 2018 (362) E.L.T. 882 (Tri. - Chennai) and argued that it is therein held that there is no requirement in Notification No. 102/2007-Cus. that the imported goods should be sold "as such". The Tribunal has held that refund of SAD would be admissible on imported latex gloves sold after sterilization, re-labelling and repacking even after introduction of deeming clause, deeming the activities of packing, repacking, etc., to be manufacture. The said decision has been followed by the Tribunal in the case of M/s. Olam Agro India Pvt. Ltd. v. Commissioner of Customs, Tuticorin reported in 2019 (370) E.L.T. 902 (Tri. - Chennai). It is stressed by the Learned Counsel that the process of fumigation undertaken on the imported 'oats' does not amount to manufacture. 2.2.2 That it is the assumption of the Department that the process of fumigation undertaken on the imported 'oats' amounts to manufacture and that it has resulted in a change in the product. It is also the contention of the Department that irrespective of whether fumigation or retail repacking amounts t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, interpreting the terms "for subsequent sale" to mean sold in the same packing as imported is reading a non-existent condition into the Notification which is not permitted in law. 2.4.3 That the imported oats are merely re-packed into smaller packs for the purposes of retail sale in the market. Oats, which are imported in bulk packs of 25 kgs., cannot be sold to the consumers, as such in the same packing. It necessarily has to be re-packed into smaller packs, for the purpose of selling the same to the consumers. 2.4.4 He relied on the decision in the case of M/s. Vijirom Chem. Pvt. Ltd. v. Commr. of Cus., Bangalore reported in 2006 (199) E.L.T. 751 (Tri. - Bang.). It has been held that the goods remained "as such" even on re-packing as they had not undergone any change. The decision in M/s. Agarwalla Timbers Pvt. Ltd. v. Commissioner of Customs, Kandla reported in 2014 (299) E.L.T. 455 (Tri. - Ahmd.), as affirmed by the Hon'ble High Court of Gujarat in Commissioner of Customs v. M/s. Variety Lumbers Pvt. Ltd. reported in 2014 (302) E.L.T. 519 (Guj.) was also relied. It is submitted that in the said case, the Hon'ble High Court held that cutting of round logs into smaller pieces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments knowingly or intentionally and this is not the dispute in the present case. Hence, Section 114AA of the Customs Act is not invokable. In any case, a mere claim for refund cannot be construed as making a declaration, statement or document which is false or incorrect in any material particular. Therefore, penalty under Section 114AA is not imposable on the appellant. 2.8 He prayed that the appeal may be allowed. 3.1 Shri M. Jagan Babu, Learned Authorized Representative (A.R.) appeared and argued on behalf of the Revenue. He submitted that the appellants have undertaken three types of job work as detailed below: (a) Retail packing of imported oats after fumigating the oats for certain days and repacked in various packing like 1 kilogram, 500 grams, 200 grams, etc., under the brand 'Quaker'; (b) In the second type of job work, oats mixed with other cereals like wheat, ragi and barley flakes cleared as Oats Plus and Oats Grain; (c) The third type of job work relates to mixing of masala oats, wherein oats are mixed with flavours like Home Style masala, kesar, lemony, etc., and dehydrated materials are added and finally packed in retail packing from 40 grams to 400 grams and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant, which was revealed only by the investigation of the SIIB, Custom House, Tuticorin. That the said suppression with a mala fide intention deserves penalty under Section 114AA. 3.6 He argued that the appeal deserves to be dismissed. 4. We have heard both sides and perused the records. 5.1 The refund claims have been rejected on two grounds: Firstly, for the reason that the goods imported had not been sold "as such" and secondly, that the refund claims are time-barred. Before we proceed to discuss the above issues, it is noteworthy to mention that though the appellants had filed refund claims in respect of multi-grain oats and flavoured oats sold by them, they have withdrawn their contest in respect of refund of SAD paid on these oats and is confining their challenge to the refund of SAD paid on Plain Oats imported and sold as such only. 5.2 In paragraph 13 of the reply to the Show Cause Notice, the appellant has stated that out of the total claim filed by the appellant, sales of 1,83,382 kilograms of flavoured oats was inadvertently included in the total sales and that they forego the claim of refund of SAD in respect of such flavoured oats and multi-grain oats. So, we do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to in para 2 above, are fulfilled." [Emphasis added] It can be seen from the above Notification that there is no condition that the goods imported have to be sold as such. The word used is "subsequent". Thus, when an assessee pays VAT on the subsequent sale of imported goods, he may file an application for refund of the SAD paid at the time of import. 6.2.1 In the present case, the appellant has done the processes of re-packing, fumigation, affixation of brand name, etc. The Department has denied refund alleging that such processes amount to manufacture and that the goods have not been sold as such. This issue has been considered by the Tribunal in various decisions, as pointed out by the Learned Counsel for the appellant. 6.2.2 In the case of M/s. Kanam Latex Industries (P) Ltd. (supra), the Tribunal has held as under : "3. Revenue entertained a view that inasmuch as latex gloves imported by the appellant, were subsequently put to certain processes like quality inspection visually, placing them in wallet/pouches and further in boxes/packages, which were being subject to process of sterilization, which process amounts to manufacture in terms of Section 2(f)(iii) of the Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible for exemption under Notification No. 102/2007-Cus. Similarly in the case of Commissioner of Customs, Amritsar v. M/s. Hero Exports reported in 2013 (298) E.L.T. 410 (Tri. - Del.), the Revenue's stand that imported e-bikes in CKD condition were subsequently assembled and sold as e-bikes, thus disentitling the importer to refund of SAD was not accepted. Similarly, in the case of M/s. Posco India Delhi Steel Processing Ltd. v Commissioner of Customs, Kandla reported in 2012 (285) E.L.T. 410 (Tri.-Ahmd.), it was held that cutting and slitting of imported HR/CR coils would not disentitle the claim of refund under Notification No. 102/2007. 6. In fact, we note that the above decisions stand followed by the adjudicating authority for the period prior to 11-7-2014 and refund has been held to be proper. However, with effect from 11-7-2014, a deeming clause was introduced in the provisions of Section 2(f)(iii) of the Central Excise Act and the various activities of packing, repacking, etc. were held to be deemed manufacture. The issue to be decided is as to whether such deeming clause having been introduced in the Central Excise Act would result in denial benefit of refund of SAD paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Chem. Pvt. Ltd. As such, we find no justification for denial of the refund of SAD. According, the impugned orders are set aside and both the appeals are allowed." [Emphasis added] 6.2.3 A similar decision was taken in the case of M/s. Vijirom Chem. Pvt. Ltd.(supra). 6.2.4 The Hon'ble High Court of Gujarat in the case of M/s. Variety Lumbers Pvt. Ltd. [2014 (302) E.L.T. 519 (Guj.)] had held that the assessee was eligible for refund of SAD paid on imported timber logs even if the logs were cut to size for subsequent sale. The appeal filed by the Department against the said decision of the Hon'ble Gujarat High Court was dismissed on merits, affirming the view taken by the Hon'ble High Court, as reported in 2018 (360) E.L.T. 790 (S.C.) 6.3 Following the above decisions, we have no hesitation to hold that the rejection of refund claim alleging that the goods were not sold "as such" is unsustainable in law. 7.1 The second ground for rejection of refund is that the refund claims were filed beyond one year from the date of payment of SAD and therefore, are barred by limitation. Sub-clause (c) of the Notification, as reproduced in paragraph 6.1 of this order, would show that the ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequently taken place and the relevant documents concerning such sale were filed with the refund application. 26. In any view of the matter, the issue as to which judgment of the High Courts should be followed if conflicting views have been taken was decided by a Larger Bench (a five Member Bench) of the Tribunal in Collector of Central Excise, Chandigarh vs. Kashmir Conductors17. One issue that was addressed by the Larger Bench was what should be done when the Tribunal is faced with conflicting decisions of High Courts. The Larger Bench of the Tribunal held that if the jurisdictional High Court has taken a particular view on an interpretation or proposition of law, that view has to be followed but if the jurisdictional High Court has not expressed any view in regard to the subject matter and there are conflicting views of other High Courts, then the Tribunal will be free to formulate its own view. The relevant paragraphs of the decision of the Larger Bench are reproduced below:- 17. 1997 (96) ELT 257 (Tri) C/52054/2019 "10. The question as to how the Tribunal should proceed in the face of conflicting decisions of High Courts has been considered in M/s. Atma Steels P. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould certainly be followed by all authorities within the territorial jurisdiction of that High Court and that the authorities in another State are not bound to follow the views taken by a particular High Court in the absence of a decision by the jurisdictional High Court with regard to constitutionality of a provisions. The Tribunal has held that since the adjudication of vires of a provision of a statute or Notification is outside the jurisdiction of the Tribunal and the jurisdictional High Court i.e., the High Court having jurisdiction over the authority and the assessee, has not struck down the provision or Notification as ultra vires, the Tribunal has to follow the same and the assessee is entitled to take the stand that he is entitled to the benefit of the particular provision or Notification since the jurisdictional High Court has not struck it down, even C/52054/2019 though some other High Court may have done so. In case the conflict of decisions among High Courts does not relate to vires of any provision or Notification, it has been held that the Tribunal has to proceed in accordance with the decision in Atma Steels P. Ltd. in the light of the decision of Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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