Gujarat High Court
Commissioner Of Customs vs Posco India on 1 March, 2006
Author: Akil Kureshi
Bench: Akil Kureshi
COMMISSIONER OF CUSTOMS....Appellant(s)V/SPOSCO INDIA DELHI STEEL PROCESSING CENTRE PVT LTD....Opponent(s) O/TAXAP/1/2013 CAV JUDGEMNT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1 of 2013 With TAX APPEAL NO. 2 of 2013 TO TAX APPEAL NO. 5 of 2013 FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI ================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?2
To be referred to the Reporter or not ?3
Whether their Lordships wish to see the fair copy of the judgment ?4
Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?5
Whether it is to be circulated to the civil judge ?
================================================= COMMISSIONER OF CUSTOMS....Appellant(s) Versus POSCO INDIA DELHI STEEL PROCESSING CENTRE PVT LTD....Opponent(s) ================================================= Appearance:
MR RJ OZA, ADVOCATE for the Appellant(s) No. 1 MR HARDIK P MODH, ADVOCATE for the Opponent(s) No. 1 ================================================= CORAM:
HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI Date :
11/02/2013 CAV JUDGEMNT (PER :
HONOURABLE MS JUSTICE SONIA GOKANI) This group of appeals is preferred under Section 130 of the Customs Act, 1962 (hereinafter referred to as the Customs Act ). As all the appeals involve common questions of law, they are being decided by a common judgment and for the purpose of better comprehension of issues, facts emerging in Tax Appeal No.1 of 2012 are considered, treating the said case as a lead matter.
Revenue is in appeal challenging the judgment and order of the Customs Excise & Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad (hereinafter referred to as the Tribunal ). M/s. Posco India Delhi Steel Processing Centre, Bawal (State of Haryana) imported consignments of goods at Kandla giving the description of goods in the Bills 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.102/2007-Cus 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.
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.6/2008-Cus No.16 of 2008.
A show cause notice was issued on 13.7.2009 seeking to know why the refund claim should not be rejected for having made breach as mentioned hereinabove. After verifying herein the Assistant Commissioner (Refund) rejected the claim under Section 27 of the Customs Act on 11.3.2010.
The respondent approached Commissioner of Customs(Appeals), Kandla aggrieved by such order of rejection, which also dismissed the appeal being Appeal No.291 of 2010 on 12.1.2011.
Yet another appeal came to be filed by the respondent before the Tribunal and hearing of the said appeal was fixed on 28.5.2012. The Tribunal, after hearing both the sides in detail, concluded that the order of rejection of refund by the respondent was devoid of merit and, accordingly, it set aside the order in original and remanded the matter back to the adjudicating authority for verifying as to whether the claimant is able to establish that the imported goods have been sold after cutting and slitting only and whether no substantive change has been made.
Aggrieved by this decision of the Tribunal the present appeal is preferred proposing following questions of law for our consideration in this appeal:-
(a) Whether in the facts and circumstances of the case, sale of the imported goods by the respondent after undertaking cutting and slitting of coils in varied thickness, length and width of the goods would vitiate the condition of subsequent sale prescribed in exemption notification No.102/2007-Customs dated 14.09.2007?
(b) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in deciding issue in appeal by placing sole reliance on decision of Tribunal in case of Vijrom Chem Pvt.
Ltd. v. Commr. of Cus., Banglore reported in 2006(199) ELT 751(Tri.-Bang.) and observing that the respondent is eligible to avail benefit under exemption notification No.102/2007-Customs dated 14.09.2007?
(c) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law by not considering the issue of interpretation of exemption notification by applying ratio laid down by the Apex Court in the case of Novopan India Ltd. v. CCE & Cus;, Hyderabad reported in 1994(73) ELT 769(SC)?
(d) Whether the impugned order of the Tribunal, which is passed without referring to and giving its finding on all submissions and precedents pointed out by learned Departmental Representative at the time of hearing of the appeal, can be said to be passed in accordance with law?
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.
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 goods under the Central Excise Act.
According to the learned advocate, the goods imported were sold after cutting and slitting, and, therefore, it cannot be said that the goods are the result of manufacturing. It was an erroneous approach on the part of the concerned authorities, which came to be appropriately dealt with by the Tribunal by setting the same right and it remanded the matter to the original adjudicating authority for the purpose of verification, and therefore also, no prejudice is likely to be caused to the Revenue. He has also sought to rely upon the decision of the this Court rendered in the case of Commissioner of Customs vs. M/s. Variety Lumbers dated 7.7.2011.
On thus hearing learned counsel for the parties and having examined the material on record with their assistance, the question, which would require adjudication is whether the respondents are entitled to claim exemption under Notification No.102 of 2007 dated 14.9.2007 for having fulfilled all conditions stipulated under the said Notification.
The respondent deals with the steal items and import of HR/CR coils as also with electrical steels of different descriptions. On import of coils, SAD is to be paid, which includes additional duty and customs duty. If such goods are sold in the Indian market, exemption could be availed of by the respondent subject to fulfilling certain conditions prescribed under the Notification. What is required is that the imported goods must not loose its original identity. In other words, between the goods imported and goods sold correlation shall have to be established to enable the respondent to seek exemption by way of refund. It appears that the activity undertaken by the respondent is of cutting of imported steel vertically and horizontally before slitting. Thus, the only process is of cutting and slitting of the imported goods. Therefore, whether such cutting and slitting would amount to manufacturing and whether the same would keep the identity of the goods in tact, entitling benefit of notification and the refund to the respondent is the question that was examined at length by the Tribunal.
11. It can be noted that the Tribunal interpreted Notification No.102 of 2007 and held that the Notifications are required to be interpreted strictly in terms of the use of wordings therein and nothing requires to be either added or subtracted. It concluded that 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 ground alone. Therefore it becomes necessary to give another opportunity to verify this aspect and request the appellant to provide evidence to show that they have sold the goods imported by them only.
12. As noted hereinabove, this Court had an occasion to deal with similar such matter where timber was being imported and before selling the timber into smaller pieces in the local market, the wood was sawn or chopped widthwise, sliced and piled. The importer of the timbers in Civil Application No.220 of 2011 in Tax Appeal No.715 of 2011 were paying duties including special countervailing duty. However, as per the exemption Notification when they claimed the refund of such SCVD paid upon the sale of goods in local market, refund claim was rejected on the ground that the importer carried out extensive process before sale in local market and, therefore, the timber was classified under different custom tariff head and not the head which bagged exception. After sawing and cutting, it was insisted upon by the Revenue that while selling the goods in the Indian market, the goods imported were changing their original form and the goods imported and sold in the market need to be the same. This Court, after a detailed examination of the issue, held in favour of the importer assessee that such process of cutting the timber into small pieces or sawing, would not amount to manufacturing process. It would be profitable to reproduce the relevant observations:-
24. Having thus heard learned advocates for the parties and having perused the documents on record, short question that calls for our consideration is whether the respondents fulfilled all the conditions of exemption notification dated 14.9.2007 or not. As already noted by a notification dated 1.3.2006, Central Government levied SCVD on all imported goods covered under different Chapters, headings and sub-headings of the Customs Tariff Act at the rate of 4% ad valorem. Subsequently, however by issuing Exemption Notification dated 14.9.2007, it was decided that in certain cases such SCVD would be refunded to the importers. Such conditions were that when such goods were imported into India for subsequent sale, the whole of the additional duty of customs leviable thereon, would be refunded provided following specific conditions were fulfilled:-
(a) Importer of the said goods shall pay all duties including the additional 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 sub-Section(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 the importer shall pay on sale of the said goods, appropriate sales tax, value added tax etc.
26. It was therefore, the contention of the Department that to be able to get benefit of the exemption notification importer must sell in the local market, the goods imported in the same condition and any change in the nature of goods would dissentitle the importer from seeking exemption from the SCVD paid.
27. We are of the opinion that whether the conditions are to be satisfied or not, has to be viewed from attending facts and circumstances of the case. The words "when imported into India for subsequent sale" or "the sale of said goods", cannot be seen in isolation. It is not in dispute that except for the above mentioned objection of the department, all other conditions specif