Custom, Excise & Service Tax Tribunal
Ideal Tridon Clamp Mumbai Co Ltd vs Nhava Sheva - Iii on 8 November, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH, MUMBAI
Customs Appeal No. 88525 of 2018
(Arising out of Order-in-Appeal No. 445-446(CRC-SAD-I/V)/2018(JNCH)Appeal-II
dated 27th April 2018 passed by the Commissioner of Customs (Appeals), Mumbai-II.)
........Appellant
IDEAL TRIDON CLAMP MUMBAI CO LTD
14/2 Mahalaxmi Indusrial D Shivner
Road, Gandhi Nagar
Lower Parel, Mumbai 400013.
VERSUS
Commissioner of Customs - NHAVA SHEVA-III ........Respondent
Null JNPT, Customs House
Nhava Sheva, Raigad - 400707
AND
Customs Appeal No. 88540 of 2018
(Arising out of Order-in-Appeal No. 445-446(CRC-SAD-I/V)/2018(JNCH)Appeal-II
dated 27th April 2018 passed by the Commissioner of Customs (Appeals), Mumbai-II.)
........Appellant
SHREE NAMOLAR INTERNATIONAL P LTD
C-55 Shastri Nagar
Jodhpur - 342003.
VERSUS
Commissioner of Customs - NHAVA SHEVA-III ........Respondent
Null JNPT, Customs House
Nhava Sheva, Raigad - 400707
APPERANCE:
Shri Shubendu Patnaik, Consultant for the Appellant
Shri Dharmendra Singh, Supdt., AR for the Respondent
CORAM:
HON'BLE DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL)
FINAL ORDER NO. A/87034-87035/2019
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Date of Hearing: 09-07-2019
Date of Decision: 08-11-2019
SUVENDU KUMAR PATI:
Rejection of refund claim of Special Additional Duty (SAD) of
customs to both the appellants by the refund sanctioning authority and
confirmation of the orders-in-original by the Commissioner of Customs
(Appeals), JNCH, Nhava Sheva, Mumbai-II in appeal nos. 110/2017 and
480/2017 is assailed by the appellants in this appeal.
2. Factual back drop of the case is that appellant M/s. Ideal Tridon
Clamp filed appeal against rejection of its application for refund of
special additional duty of customs in respect of 8 Bills of Entry
amounting to Rs.5,20,410/- in terms of notification no. 08/2007 COS
dated 14-09-2007 read with 93/2008 notification no. Similarly in
respect of 4 Bills of Entry amounting to Rs.10,14,283/- of appellant M/s.
Shree Namolar International (P) Ltd, rejection of refund of Special
Additional Duty (SAD) was also challenged before the Commissioner
(Appeals) who passed a common order rejecting both the refunds which
has been assailed in this appeal.
3. During the course of hearing of the appeal, Learned Counsel for
appellant submitted in appellant M/s. Ideal Tridon Clamp's case that
provisional assessment was finalised on 27-12-2017 and in view of
Section 27 of the Customs Act, appellant was entitled for refund within
one year of the date of final assessment for which invocation of
notification no. 93/2008 dated 1st August 2008 should have been dealt
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by the Commissioner to mean the date of final assessment as date of
payment, which was not done by him and giving over riding effect to
such executive notification over the Statutory law, he considered the
date of payment of SAD for the purpose of calculation contrary to the
findings of the Hon'ble High Court (Delhi) in the case of Pioneer India
Electronics (P) Ltd. v. Union of India reported in 2014 (301) E.L.T. 59
(Del.). In respect of the refund claim of other appellant Shree Namolar
International P Ltd., Learned Counsel for it submitted that Bills of Entry
dated 6, 20 & 21 January 2016 were taken as the date of payment of
SAD to refuse refund claim filed on 30th January 2017 despite the fact
that appellant was to become eligible for such refund of SAD only after
payment of VAT and the same contradicted the decision of Hon'ble Delhi
High Court passed in Sony India Pvt. Ltd. reported in 2014 (304) ELT
660 as well as decision of this Tribunal held in the case of Bitumen
Corporation I. Ltd. in appeal no. C/86932/2018 for which he prays to
set aside the order passed by the Commissioner (appeals) and to allow
refund of SAD to the appellants.
4. In response to such submissions, Learned Authorised
Representative for the respondent Department supported the reasoning
and rationality of the order passed by the Commissioner (Appeals) and
argued, with reference to the Hon'ble Bombay High Court i.e. the
jurisdictional High Court's finding given in CMS Info System Ltd that
period of one year for refund of SAD is a mandatory requirement which
was to be computed from the date of payment of SAD and since it had
taken in to consideration the order passed by Hon'ble Delhi High Court
in Sony India case which is also followed by this Tribunal vide its decision
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dated 03-06-2019 upholding such rejection order passed by the
Commissioner (Appeals) in Associated Chemical Corporation case
(Appeal no. C/86673/2018), he sought no interference in the order
passed by the Commissioner (Appeals).
5. Heard from both the sides and perused the case record as well as
the additional submissions which also contains documentary evidence
to the effect that provisional assessment was completed on 27-12-2017.
Perused the copy of the confirmation of assessment vide letter of the
Asst. Commissioner of Customs in Annexure (6) of the additional
submissions. Further going by the OIO and OIA, it can be said that
there is nothing available in these two orders or in the case records to
substantiate that such ground was taken before the authorities below
while claiming refund to bring the claim into the purview of Section 27
of the Customs Act. However, a cursory look at the genesis of the
introduction of SAD in India by invoking Section 35 of the Customs Act,
which has been dealt elaborately in the judgment of M/s Bitumen
Corporation (I) Ltd would reveal as hereunder:
(i) As available in the Economics Time of 10.06.2008, SAD on
Customs @ 4% has been levied on all imports by the Budget
2006-07. As no Central Sales Tax or VAT is levied on imports,
the levy of SAD was intended to create a level playing field
for domestic goods vis-a-vis imports. A manufacture of
excisable goods is permitted to utilise the SAD paid on
imported goods as a credit against its excise duty liability for
which SAD is not a cost for a manufacturer and as such does
not operate as a countervailing tax. However, such credit
was not available to a service provider or to the traders. An
importer - traders who imports and sells goods in India upon
payment of CST/VAT had to first pay SAD, and then CST/VAT
on sale of the imported goods.
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(ii) It was felt that for a trader, rather than being countervailing,
levy of SAD results in double taxation. To be WTO-compliant
and upon demand from the industry, the Government of India
issued a notification exempting all goods imported into India
for sale from levy of SAD, if such goods were resold in India
upon payment of appropriate CST/VAT but such exemption
has been granted by way of a refund and the procedure
prescribing such refund has been issued by way of
Circular/Notification No. 102/2007-Cus. dated 14.09.2007.
The conditions are enumerated in para 2 of the said
notification in which under sub para (c) the importer will have
to file a claim of refund to the jurisdictional Customs Officer
along with copies of documents including documents
evidencing payment of CST/VAS on sale of such imported
goods, for which SAD was paid. Sub-para (c) was amended
by way of Notification No. 93/2008-Cus. dated 01.08.2008
where such refund claim before the jurisdictional Customs
Officer was stipulated to be filed before the expiry of one year
from the date of payment of the said additional duty of
Customs.
Dispute concerning such fixation of one year time period to
claim refund had reached the Hon'ble Delhi High Court
through petition of M/s Sony India Ltd. and in the above
referred judgment, it was observed by the Hon'ble High Court
that the reason behind fixing of such time frame was that
some field formation authorities invoked Section 27 of the
Customs Act, where normal time limit of six months was
prescribed to claim refund and considering the fact that goods
imported will have to be dispatched for sale even to different
parts of the country which the importers may find difficult to
dispose of soon and complete the requisite documentation
within the normal period of six months, above exemption up
to a period of one year from the date of payment of duty had
been necessitated, apparently in the public interest.
Ultimately, Hon'ble Delhi High Court rejected that time frame
inclusion notification on the ground that subordinate
legislation on goods cannot prevail over statutory substantive
rights. On the contrary, Hon'ble Bombay High Court in the
case of CMC Info Systems Ltd. (supra), hold a finding that
when the exemption is conditional all the conditions therein
have to be complied with and the appellant cannot say one of
those conditions as excessive, arbitrary, unjust or
unreasonable, which did not suit it. As a matter of judicial
discipline and in conformity to the rule of precedent, the
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finding of the jurisdictional High Court is normally considered
as binding on this Bench of the Tribunal, since Article - 227 of
the Constitution of India confers power of Superintendence
on the Hon'ble High Court over the Tribunals throughout its
territories. However, considering the peculiar composition of
CESTAT which is a Tribunal having jurisdiction over the whole
territory of India, Bombay Zonal Bench being a bench for the
purpose of sitting of CESTAT, it would be inappropriate to
delve into the intricacies of the issue in view of the fact that
when Article - 227 was drafted, conception of National
Tribunals and Article - 323 A & B were not in existence for
which Tribunals, in Article - 227 would mean to read State
Tribunals, to be subjected to the superintendence and control
of jurisdictional High Court. Further five Members Bench of
this Tribunal, in the case of Atma Steel Pvt. Ltd. & Others Vs.
Collector of Central Excise, Chandigarh and others reported
in [RLT (LB-CEGAT)-87] had held as follows.
"70. We also feel that as a Tribunal, working on all-India
basis, we have the freedom to consider judgments holding
conflicting views given by different High Courts, and then
see for ourselves as to which authority, applied more fully
and aptly to the facts of a given case, before us. For, in view
of the scheme of the Act, under which we are functioning,
as brought into focus in paras 59 and 61 above, we are
constrained to repel the argument, that we are
circumscribed by the view of a particular High Court where
the assessee or a particular Collectorate is, because that
would inevitably land the Tribunal in a mess, propounding
conflicting and contradictory views, vitiating its very
existence, and cutting down the wholesome principles,
desirability whereof has been highlighted in para 60 above.
We, therefore, feel duty-bound to determine ourselves, this
issue; namely, continuation of proceedings pending at the
time of the respective amendments, and adopting the view
of Madhya Pradesh High Court as enunciated in Gwalior
Rayon case (supra), we hold that these proceedings can
continue, which view a Bench of this Tribunal already
expressed, without much controversy having been raised in
the case of Carew & Co. Ltd. v. Collector of Central Excise,
Allahabad (1983 E.L.T. 1186) (CEGAT). Another Bench of
this Tribunal (NRB) also held similarly in case : Sri Ram
Pistons and Rings Ltd. v. C.C.A., Meerut (1980 E.L.T. 927)."
In view of the above proposition of law laid by the Larger
Bench of the Tribunal on judicial precedent to be followed, the
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freedom to consider judgments holding conflicting views given
by different High Court is available with the Tribunal to see for
itself as to which authority would apply fully and aptly to the
facts of a given case, to be decided by the Tribunal.
A cursory reading of the Notification No. 102/2007-Cus. and
Notification No. 93/2008-Cus. would clearly reveal that in the
public interest, such notifications were made by the
Government of India and as discussed earlier, SAD was made
applicable to counter balance CST/VAT and create a level
playing field for domestic goods so that price difference
between the locally manufactured goods and imported goods
would not put the local manufacturer in a disadvantageous
position. Admittedly CST, VAT are collected for distribution
among the States, for which it is difficult to understand why
SAD is introduced as a counter balance. It appears that only
to maintain the price equilibrium, SAD has been introduced as
a precautionary measure to provide coverage to indigenous
goods. Therefore, it is collected with the avode purpose of
providing a security to such indigenous goods and collected as
a security from the importer so that the movement they sale
it up in the domestic market, they will pay CST/VAT
accordingly and get back the SAD already paid, by way of
refund. This analysis is fortified by the fact that such refund
is designed as an exemption clause and not as a rebate or
refund of excess payment.
As found from the para 35 of the judgment of Hon'ble Bombay
High Court in CMC Info System Ltd. case, exemption flows
from the power to exempt and refund flows from the power to
grant such refund and makes it admissible. The word
'exemption' in its common parlance indicates "the act of being
free from an obligation or liability imposed". Therefore,
purpose of this exemption notification is not to refund the tax
but to exempt from payment of tax or duty which was not due
to be paid but was collected to meet certain contingency. The
right to avail such exemption from payment of duty would
accrue upon sale of the imported goods may be in the market,
consequent upon payment of CST/VAT. The cause of action
can only arise upon sale of the imported goods which is a
market dependent condition and sometimes sale may not
occur even within the period of one year. In such a situation,
if benefit of exemption notification is not extended to the
appellant then the same would amount to double taxation,
which no law of the land would approve of, even in the
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international arena. Therefore, such a duty imposed to
counter balance the Sales Tax or the Value Added Tax, Local
Tax etc. will have to be refunded and upon payment of those
taxes alone, the cause of action would accrue and such counter
balancing payment already made was to be refunded. This
being the purpose of introduction of SAD, I am of the
considered view that amended sub-para (c) of para 2 which
stipulated the time period to file claim of refund as one year
from the date of payment of said additional duty of Customs
should be read as effective payment of additional duty of
Customs by way of CST/VAT as the purpose of payment of
SAD at the time of import was in the nature of counter
balancing the CST/VAT etc., which could be treated at par with
security. I am constrained to borrow this analogy as in the
CMC Info System Ltd. (supra) judgment, Hon'ble Bombay High
Court had expressed its apprehension that it was not possible
to guess as to whether refund application would be held to be
not maintainable purely on the ground that condition like sale
of the said goods on payment of appropriate of Sales Tax or
Value Added Tax was not made. Going by the Board Circular
No. 16/2008 which stipulates three months time period for
processing of such refund, sale of goods and payment of
CST/VAT etc. being condition precedent to file refund claim,
no incomplete refund application could have ever been
entertained by the respondent-department as the same is
unusual to its prevailing practices. Any such application could
be considered as not-maintainable being premature when
such stipulation/condition is not met. Therefore, with
respectful regards to the findings of the Hon'ble Delhi High
Court and Hon'ble Bombay High Court on the issue regarding
legality of the prescribed time period to file refund which was
challenged and answered, and having regard to the definition
of relevant time given in Explanation (3) of Sub-Section (5) of
Section 11B of the Central Excise Act, 1944 wherein time
frame is stated to have run from the date on which refund is
held to be payable, I am of the firm opinion that the same
period of one year is to be computed from the date of payment
of CST, VAT etc. upon sale of goods. It is a settled principle
that Tribunal being creature of statute, cann't go beyond the
provisions of law but there is no impediment on the part of the
Tribunal to read into the law to provide meaning and clarity to
the provisions of law for the purpose of making it virtually
implementable. Interpretation of the provision under sub para
(C) of para 2 has not been done by the Hon'ble High Court of
Bombay or Delhi who have primarily dealt with the legality of
having a time limit to deal with cases of SAD refund. "
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7. In view of above proposition of law the following order is passed.
ORDER
8. Both the appeals are allowed and the order passed by the Commissioner Customs in order no. No. 445-446(CRC-SAD-I/V) /2018(JNCH) Appeal-II dated 27th April 2018 is hereby set aside. The appellants are entitled to refund of SAD on production of proof of VAT/CST payment within a year of their filing application before refund sanctioning authority who is directed to complete the refund process within a period of two months from the date of receipt of this order with due regard to Section 11/BB of the Central Excise Act dealing with interest on delayed refunds.
(Order pronounced in the court on 08-11-2019) (Dr. Suvendu Kumar Pati) Member (Judicial) John