Custom, Excise & Service Tax Tribunal
Commissioner Of Customs (Air), Chennai vs M/S. Westcon India Pvt. Ltd on 23 September, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
C/S/40251 to 40254/2013 and C/CO/40770 to 40773/2013
and
C/40302 to 40305/2013
(Arising out of Order-in-Appeal C. Cus. No. 1310 to 1313/2012 dated 16.11.2012 passed by the Commissioner of Customs (Appeals), Chennai)
For approval and signature:
Honble Shri P.K. Das, Judicial Member
Honble Shri Mathew John, Technical Member
1. Whether Press Reporters may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether order is to be circulated to the Departmental authorities?
Commissioner of Customs (Air), Chennai Appellant
Vs.
M/s. Westcon India Pvt. Ltd. Respondent
Appearance Shri M. Rammohan Rao, DC (AR), for the Appellant Smt. Pramila Viswanathan, Advocate for the Respondent CORAM Honble Shri P.K. Das, Judicial Member Honble Shri Mathew John, Technical Member Date of Hearing: 23.09.2013 Date of Decision: 23.09.2013 Final Order No. Per Mathew John Revenue has filed these appeals against the orders of the Commissioner (Appeals) disposing of four appeals filed by the same importer against different Orders-in-Original. The issue involved in these Orders-in-Original relates to refund of Special Additional Duty of Customs, claimed by the respondent under Notification No. 102/2007-Cus dated 14.9.2007. On 19-07-2013 when the stay petitions were taken up for hearing it was considered by the Bench that both stay petition and Appeal should be heard together on the next date of hearing and both sides were informed that both stay petitions and appeals would be heard together on 23-09-2013. Accordingly the matters were heard on 23-09-2013.
2. Special Additional Duty of Customs (SAD) is levied under section 3(5) of Customs Tariff Act, 1985 by issuing notification 19/2006-Cus dated 01-03-2006. This duty is levied, at the time of importation of goods, in lieu of Sales Tax/VAT levied by the states. There is a scheme under which the importer can claim refund of SAD paid if it is proved that after importation the goods are sold on payment of VAT as applicable. This scheme is operated through exemption notification 102/2007-Cus and the impugned refund claims are filed as per provisions of this notification.
3. The adjudicating authority partially sanctioned refund claims and partially denied the claims in all the above four orders for various reasons briefly indicated in the following Table:-
S. No. Appeal No. O-in-O No. Date Rejected amount in Rupees Remarks
1.
C3/487/R/2012 149/2012 10.4.2012 10,96,148/- (59 B/Es
1. Without challenging the order of assessment
2. C3/503/R/2012 205/2012 26.4.2012 7,10,422/- (72,823/- against 8 B/Es 6,97,500/ - (27 B/Es)
1. Discrepancy between the bills of entry and the sales invoices
2. Without challenging the order of assessment
3. C3/504/R/2012 248/2012 11.5.2012 7,12,344/- {19,214/- for 4 B/Es and 6,69,478/- for 30 B/Es and 23652/- for 3 B/Es
1. Goods sold prior to the importation or on the same day of importation.
2. Without challenging the order of assessment
3. Discrepancy between the bill of entry and the sales invoices
4. C3/505/R/2012 258/2012 16.5.2012 8,65,405/- {28,134/- against 3 B/Es and 8,37,271/- against 18 B/Es
1. Mismatch of description between the bills of entry and the sales invoices.
2. Without challenging the order of assessment
4. The main ground on which refunds were denied by adjudicating authority in all the cases is that the importer claimed refund without challenging the order of assessment as per Bills of Entries. Here it is relevant to mention that the importer had imported electronic goods like networking equipment, paid SAD as notified under notification 19/2006-Cus. dated 1.3.2006 at the time of import and claimed refund of SAD so paid, as per provisions of Notification No. 102/2007-Cus dated 14.9.2007. There was another notification namely Notification No.29/2010-Cus. dated 27.10.2010 (Sl. No. 1) which provided exemption from SAD for all pre-packed goods intended for retail sale in relation to which it is required, under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or the rules made there under or under any other law for the time being in force, to declare on the package thereof the retail sale price of such article. The case of the Revenue is that networking equipment was exempted from SAD by Notification No. 29/2010-Cus dated 27.2.2010. After paying duty without availing exemption under Notification 29/2010 the importer is claiming refund under another Notification No. 102/2007-Cus dated 15.9.2007 and such change in claim for benefit under notification and consequent refund can be claimed only after challenging the assessment done as per the Bills of Entry at the time of import. Since this was not done, the original authority held that where Notification No. 29/2010-Cus, could have been claimed but, was not claimed by the importer, the importer could not claim benefit of Notification No. 102/2007-Cus at a later point of time without challenging the original assessment.
5. Aggrieved by the adjudication orders the appellant filed appeals with Commissioner Appeal who passed order as under:-
6. Reference to the above notification is warranted only where the assessment has been carried out extending the said notification. In the instant case, as clearly claimed by the appellant, the assessment was carried out based on the notification 19/2006-Cus. dated 1.3.2006 by which the SAD @ 4% was charged. I also observed from the impugned order that the LAA nowhere concluded that the bills of entry pertaining to the import of pre-packaged commodities were assessed by extending the exemption under Notification No. 29/2010. While it is so, where is the necessity to bring in that notification which was not at all relevant to deny the refund. Also, I find the LAA except for the above unwarranted observation has not stated that the refund claims were in nor order in respect of the conditions of compliance as per notification No. 102/2007-Cus. dated 14.9.2007. If the appellant had not claimed the exemption under Notification No.29/2010, there is nothing in the law to prevent him from claiming the benefit of equally eligible notification viz. 102/2007 and the department has to extend the same subject to the compliance of the conditions specified therein. The LAAs point of averment in this regard is not tenable.
7. It is an undisputed fact that the appellant paid the SAD @4% in terms of notification No. 19/2006-Cus. dated 1.3.2006 and claimed the refund under notification 102/2007-Cus. dated 14.9.2007, which is perfectly and legally tenable in law.
8. The other grounds on which the refund claims were rejected fall under the category of bill of entry description of the goods do not tally with the sales invoices; the imported goods sold prior to the date of importation or on the date of importation without possessing the physical ownership of the goods. The appellant on the mis-match of the description of the goods in the bill of entry vis-`-vis the local sales invoices has stated that details were presented along with appeal to show the tally of the imported goods with the local sales invoice, but I dont find any such details. As regards the observation of the LAA that the local sales invoice was dated prior to the Bill of Entry date, the appellant has stated that the goods accompanied the sales invoice which is not convincing, the criteria should be date of invoice only. There can be no infirmity in the rejection of the above claims by the lower authority. However, since no opportunity was given to them to put forth their submissions before rejection, as pointed out by the appellants, there is clearly a case of non-adherence to the principles of natural justice.
9. In view of the above discussions, the LAAs impugned orders are set aside to the extent of rejection of refund claims and directed to consider those bills of entry pertaining to the rejection in all the orders by scrupulously following the principles of natural justice, nevertheless, keeping in mind the above discussions and may pass a fresh order regarding the rejections only.
6. Aggrieved by the order of the Commissioner (Appeals), Revenue has filed these appeals. The argument of Revenue is that when SAD is exempted under Notification No. 29/2010-Cus, importer had no option to pay such exempted duty and subsequently claim refund of such duty As per the provisions of Notification No. 102/2007-Cus. If any refund had to be claimed, the appellant should have challenged the original assessment orders on the Bills of Entry as held by the Honble Supreme Court in the case of Priya Blue Industries Ltd. Vs. Commissioner of Customs 2004 (172) ELT 145 (SC). Therefore, the Revenue is praying that the Order-in-Appeal may be set aside.
7. Arguing for the respondent, the learned Advocate submits that the importer is not asking for changing the assessment made at the time of import. They are only asking for refund of the duty paid at the time of import in terms of the provisions under Notification No. 102/2007-Cus. The refund under this notification is on a different footing as compared to other refunds section 27 of Customs Act. She points out that in the case of any goods for which SAD is payable and for which Notification No. 29/2010-Cus is not applicable, the importer has to pay SAD as applicable at the time of importation and thereafter claim refund of SAD as per the provisions of Notification No. 102/2007-Cus after satisfying the main condition of selling the goods on payment of applicable VAT and satisfying various other conditions in the notification. The said Notification by its very nature cannot claimed at the time of importation of the goods. It is claimed normally almost one year after the period of importation after selling the goods on payment of VAT on such goods. In such a situation, re-assessment of the goods are not intended or insisted upon by the Department. Thus the scheme of the Notification No. 102/2007-Cus envisages payment of duty initially at the time of importation and thereafter claiming refund subject to satisfying the condition under Notification No. 102/2007-Cus.. Without any re-assessment
8. In the instant case, the only difference is that there was Notification No. 29/2010-Cus which the importer could have availed. The importer did not avail the said exemption. According to the Ld Advocate, there is nothing in the Customs Act, 1962 which compels an importer to avail an exemption provided by any particular notification. She points out that in the Central Excise Act, 1944, under Section 5A, there is a specific provision introduced with effect from 13.5.2005 by way of Section 5A(1A). The said Section reads as under:-
Section 5A(1A) For the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods.
9. The Ld Advocate for respondent submits that there is no such provision under Section 25 of the Customs Act, 1962. When in the year 2005, the said clause was introduced in Central Excise Act, the legislature did not consider it necessary to insert such provision in the Customs Act. Since such provision is not present in Customs Act, she submits that the importer cannot be faulted for having paid SAD without availing the exemption. She also argues that since the importer is not requesting for change of assessment made at the time of importation, the question of challenging the assessment as per Bills of Entries does not arise. The decision of the Honble Supreme Court in the case of Priya Blue Industries (supra) is not applicable in a situation where the importers themselves are not challenging the assessment at the time of importation. The importer is only claiming refund due to them as per the provisions of Notification No. 102/2007-Cus as in the case of importers whose products are not exempted from SAD vide Notification No. 29/2010-Cus.
10. We have considered submissions on both sides. We are of the view that this is not a case where the importer is seeking change in assessment made at the time of importation of goods. Only in such a situation, the decision of the Apex Court in Priya Blue Industries (supra) would apply. Even in such cases, the Honble Delhi High Court has clarified that the said decision would apply only in a case where there was a dispute between the Department and the importer at the time of importation of the goods and the matter was adjudicated either through assessment of BE or through further proceedings. Where there was no lis at the time of importation, the Delhi High Court held in the case of Aman Medicals Products Ltd. VS.CC 2010 (250) E.L.T. 30 (Del.) that provisions under Section 27 of the Customs Act, 1962 for refund can be made use of for claiming duty erroneously paid without challenging the original assessment.
11. In this case, the refund is not claimed under section 27 of the Customs Act. The appellant is not requesting for change of the assessment made at the time of importation. For grant of refund of SAD as per notification 102/07-Cus re-assessment of Bills of Entries are not prescribed under the notification. In such a situation the argument of Revenue based on the decision of the Apex Court in the case of Priya Blue Industries (Supra) is totally misplaced.
12. The only issue to be decided is whether an importer can be penalized for not having claimed exemption under Notification No. 29/2010-Cus at the time of importation by refusing to grant refund under Notification No. 102/2007-Cus, when both the notifications were in operation on the date of importation and date of claiming refund. The decisions of the courts are to the effect that an assessee cannot be forced to avail any particular exemption. The following decisions are relevant:-
(i) CCE Vs. Narayan Polyplast-2005 (179) E.L.T. 20 (S.C.)
(ii) Reliance Industries Ltd. v. CCE, Ahmedabad - 2003 (152) E.L.T. 423 (Tri.-Mumbai)
(iii) Mafatlal Industries Ltd. v. CCE, Vadodara - 2003 (162) E.L.T. 1143 (Tri- Mumbai) Maintained in 2005 (179) ELT 276 (Supreme Court)
(iv) Pankaj Petropack Pvt. Ltd. v. CCE, Vadodara - 2002 (143) E.L.T. 600 (Tri.- Mumbai) Maintained in 2005 (179) ELT 276 (Supreme Court)
(v) CCE, Jaipur v. Global Overseas - 2005 (192) E.L.T. 334 (Tri. - Del.)
(vi) Nikita Transphase Adducts Pvt. Ltd.Vs. CCE-2007 (7) S.T.R. 182 (Tri. Mumbai
13. These decisions were in the context of Central Excise duty. In the case of Central Excise duty there is a consequence in paying duty on exempted goods because the assessee will be able to pass on the duty incidence on the raw material and capital goods to the next stage by paying duty whereas such incidence cannot be passed on if the goods are exempted. Thus there is an adverse consequence to revenue when excise duty is paid on an exempted product.
14. Against the back ground of such decisions of Courts and Tribunal, on 13-05-2005, the Legislature introduced the sub-section (1A) in section 5A of Central Excise Act, 1944 as already reproduced in para 8 above. But no such explanation has been inserted in section 25 of Customs Act, 1962. Further in the case of SAD, payment at the time of importation and claiming refund at a later point of time can cause financial disadvantage to the importer and no such consequence to Revenue.
15. In such a situation, we find no reason to deny refund under Notification No. 102/2007-Cus if the appellant satisfies the conditions therein. The order of the Commissioner (Appeals) is only to that effect. We do not find any infirmity in the order passed by the Commissioner (Appeals). Therefore, the appeals filed by the Revenue are dismissed. The stay applications are also disposed of accordingly. The respondent has filed cross objections. These only support the order of the Commissioner (Appeal) and no additional relief is prayed for. So these also get disposed of by the above order.
(Pronounced in open court)
(Mathew John) (P.K. Das)
Technical Member Judicial Member
Rex