Custom, Excise & Service Tax Tribunal
Commissioner Of Customs, Kandla vs M/S Luna Infraprop Pvt.Ltd on 7 May, 2015
In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
Appeal No.C/11025/2014-DB; C/Cross/13352/2014
[Arising out of OIA-698/2013/CUS/COMMR-A-/KD, dt. 09/12/2013, passed by Commissioner (Appeals) Customs, Kandla]
Commissioner of Customs, Kandla Appellant
Vs
M/s Luna Infraprop Pvt.Ltd. Respondent
Represented by:
For Appellant: Shri K. Sivakumar, Authorised Representative For Respondent: Shri P.P. Jadeja, Consultant For approval and signature:
Honble Mr. P.K. Das, Member (Judicial) Honble Mr. H.K. Thakur, Member (Technical)
1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
HONBLE MR. P.K. DAS, MEMBER (JUDICIAL) HONBLE MR. H.K. THAKUR, MEMBER (TECHNICAL) Date of Hearing/Decision:07.05.2015 Order No. A/10532 / 2015 dt.07.05.2015 Per: P.K. Das
1. The relevant facts of the case, in brief, are that the Respondents entered into an agreement with M/s Gama Infraprop Pvt. Ltd. (GIPL) for supply of certain equipments and materials for the power plant at Uttarakhand. GIPL is the project proponent decided to set up Power Plant at Udham Singh Nagar, Uttarakhand. The Respondent has been retained as EPC contractor through International Competition Bidding process, agreed to do erection, procurement and commissioning of the said plant. The Respondents imported a consignment described as Gas Turbine and Generator Unit & MSD Unit 1 & 2, Lubricants, Inlet Support/Steel Structure paid additional duty of customs (4% CVD) as per Section 3(5) of the Customs Tariff Act, 1975 at the time of importation. The goods were sold to M/s GIPL. The Respondents filed refund claim of 4% additional duty of Customs under the provision of Section 27 of the Customs Act, 1962 read with Notification No.102/2007-Cus, dt.14.09.2007 as amended, vide their letter dt.31.07.2012 as the imported goods were sold during the month of March 2012 to GIPL. The Adjudicating authority had sanctioned the refund claim. The Revenue filed appeal before the Commissioner (Appeals) against the Adjudication order on the ground that the refund was sanctioned in violation of condition of Notification No.102/2007-Cus (supra) as the Respondents had made the sale transactions only on paper. By the impugned order, the Commissioner (Appeals) rejected the appeal filed by the Revenue. Hence, the Revenue filed this appeal.
2. The learned Authorised Representative for the Revenue submits that refund of Customs duty is eligible on SAD for sale of the said goods. There was no sale transaction between the Respondents and GIPL. It is revealed from the contract that GIPL entered into contract with foreign suppliers for supply of materials in the name of GIPL as the owner and the recipient mentioned therein being Respondents, appointed as EPC contractor. It is submitted that the Bank of Baroda has financed the Power Plant project of GIPL. It is submitted that the sale transaction between the Respondent and GIPL are merely dummy transactions per se. He also submits that the sale invoice would show that the Respondents sold the goods to M/s GIPL below the purchase price. He reiterates the grounds of appeal filed by the Revenue.
3. The learned Counsel on behalf of the Respondent drew the attention of the Bench to the relevant portion of the agreement to establish that the Respondents passed the title of the goods to M/s GIPL by raising invoices. He also placed the certificate issued by the Government of NCT of Delhi, Department of Trade & Taxes, New Delhi, certifying that the Respondents sold the goods to M/s GIPL and paid CST. He further relied upon the various case laws and filed written submissions with compilation of case laws.
4. After hearing both the sides and on perusal of the records, we find that the Respondents claimed refund paid by them as 4% SAD (CVD) on imported goods at Mundra in terms of Notification No.102/2007-Cus, dt.14.09.2007 as amended by Notification No.93/2008-Cus, dt.01.08.2008. The Central Government exempted the goods, when imported into India for subsequent sale, from the whole of additional duty of Customs leviable under Section 3 (5) of the Customs Tariff Act. The exemption shall be given, if the following conditions are fulfilled:-
(a)?the importer of the said goods shall pay all duties, including the said additional duty of customs leviable thereon, as applicable, at the time of importation of the goods;
(b)?the importer, while issuing the invoice for sale of the said goods, shall specifically indicate in the invoice that in respect of the goods covered therein, no credit of the additional duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible;
(c)?the importer shall file a claim for refund of the said additional duty of customs paid on the imported goods with the jurisdictional customs officer;
(d)?the importer shall pay on sale of the said goods, appropriate sales tax or value added tax, as the case may be;
(e)?the importer shall, inter alia, provide copies of the following documents alongwith the refund claim :
(i) document evidencing payment of the said additional duty;
(ii) invoices of sale of the imported goods in respect of which refund of the said additional duty is claimed;
(iii) 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.
The jurisdictional customs officer shall sanction the?3. refund on satisfying himself that the conditions referred to in para 2 above, are fulfilled.
5. The main contention of the learned Authorised Representative for the Revenue is that there was no sale of the imported goods to M/s GIPL and therefore, the Respondent is not eligible for refund. But, there is no dispute that the Respondent fulfilled all the conditions in so far as they have paid sales tax, VAT and also paid the additional duty of customs. According to the Revenue, all these invoices are merely paper transactions. We find from the Agreement of Supply between M/s GIPL (Buyer) and the Appellant (Supplier) that GIPL decided to set up a power plant in Khasra, Uttarakhand. The Appellant is engaged in the business of undertaking procurement of supply of power plant equipment and GIPL desired to purchase certain equipments and materials. The Respondents passed the title of the goods and certificates to the project authority by raising invoices. For the proper appreciation of the case, the relevant portion of the order of Commissioner (Appeal) are reproduced below:-
5.3 The chart clearly reveals that with or without applying FIFO method, CST in respect of Invoice No.329/24.03.2012 was actually paid alongwith interest on 31.07.2012, i.e. before filling the present refund claim on 02.08.2012. Although there is no ambiguity on the factual position, I am of the view that the CA certificate and the impugned order mentioning details of both the aforesaid CST payments (even when payment dt.07.08.2012 was having no relevance in this case) and that too without correlating with the corresponding sales invoices, created a confusion which resulted in this appeal. Thus, I find no merit in the objection raised by the appellant-department in this regard.
6. Appellant-department has also argued that the CA has issued his certificate without verification of records to facilitate the respondent for filing refund claim in time. This was mainly due to the aforesaid allegation that CST was paid only after filing of the refund claim whereas the CA certificate certifies payment of CST beforehand. In view of the factual position discussed supra, appellant-departments argument against the veracity of CA certificate also stands negated.
7.3 The above clauses make it clear that the role of the respondent has been itemized into two categories, i.e. supply of equipments and project co-ordination and management with prominence given to the former. Article 6 of the agreement indicates the total contract price as Rs.493.70 Crores which includes CIF price of equipments at nearby Indian seaport or at Delhi domestic airport, packing charges for seaworthy transportation of equipments, transit insurance included on the supplies made on CIF basis and all applicable taxes/duties. Further, Article 10.2 which deals with the terms of shipment and title of the equipments, specifies that notwithstanding which party has title, care custody and control of the equipment and loss or damage thereto shall remain with the supplier (respondent) until passed to the buyer at the delivery point. The term delivery point has been defined in Article 1 as any Indian seaport for imports and airport at Delhi or Mumbai for domestic supplies. The delivery date has also been specifies as the day on which the last part of the equipment/material is delivered to such delivery point. Article 6.5 which provides for delivery payments reads as under:-
Supplier shall, pursuant to a direct disbursement procedure approved by the buyer, furnish its commercial invoice in respect of delivery payments of the contract price, accompanied by the supporting documents set forth in Appendix B hereto, to the agent corporate. Therefore, buyer assumes no responsibility for early payments for supplies or import duties, which in the aggregate, on a quarterly basis, exceed the cumulative total amounts shown in Appendix B, supplier shall provide the buyer at least 25 (twenty five) days prior notice of such early shipment.... 7.4 Respondent has also submitted that Bank of Baroda has financed the power project of their buyer with a project cost of Rs.909.18 Crores; that the facilities and finance granted by the Bank is secured against hypothecation and mortgage of the entire assets of the buyer which included each item of equipment procured and supplied by them to the buyer; and that the bank would finance only when the title and ownership of all such equipments are transferred from them to the buyer. I have examined a copy of the sanction letter dt.25.02.2011 issued by Bank of Baroda, submitted by the respondent during the hearing, which supports their contentions. The letter indicates that the bank deputes their engineer to the project site for periodical inspection of all equipments and the progress of the project before disbursing phased installments of the loan.
7.5 A closer scrutiny of all these documents support their submissions made by the respondent that despite their responsibility for implementation of the whole power project till its final stage of commissioning and final running, the title and care custody of each equipment procured for the project has already been transferred to the buyer (owner) by way of subsequent sale of such goods under their commercial invoices for which they were receiving payments from the buyer on a quarterly basis as per the terms of supply agreement. Thus, apart from their job of commissioning and trial running of the power plant as a whole in their status as EPC contractor, respondent also assumes the status of an independent supplier of all equipments to the project. I have also examined as to what constitutes sale in terms of The Central Sales Tax Act, 1956. The definition of the term sale as defined under Section 2(g) of the said CST Act states:-
sale, with its grammatical variations and cognate expressions, means any transfer of property in goods by one person to another for cash or for deferred payment or for any other valuable consideration, and includes a transfer of goods on the hire-purchase or other system of payment by installments, but does not include a mortgage or hypothecation of or a charge or pledge on goods.
8.1 I have also considered the other grounds of appeal. Appellant-department has pointed out a variation in the date of suppliers invoice appearing in the BOE and in the sale invoice issued by the respondent. While BOE indicates the invoice date as 21.07.2011, sale invoice mentions the date as 21.08.2011. Although respondent has attributed the variation to a bonafide mistake in the data entry by customs officers which I find reasonable and acceptable. I find that this objection is trivial and has no relevance to the admissibility of refund of 4% SAD as provided under Notification No.102/2007 (supra), once details of goods in the BOE and details of goods in the sales match completely.
6. We find that the sales tax authorities accepted the sale of the goods on the basis of invoices and confirmed the payment of CST. It is revealed from the agreement that the title of the goods was transferred to M/s GIPL as soon as the invoices were raised to M/s GIPL. The sale is completed as soon as titles are transferred to the purchasers. In this situation, the assessing officer cannot question the basis of sales transactions. The learned Authorised Representative vehemently contested the impugned order in so far as the finance was arranged by M/s GIPL. In our considered view, the finance arranged by M/s GIPL cannot be basis to hold that there was no sale of the goods. The arrangement of finance is within the domain of the sale and purchase of the two parties, which are common in nature. It is noted that the sales tax authorities accepted the sale of the goods on the basis of invoices produced by the Respondents. The exemption Notification No.102/2007-Cus stipulates the condition for availing the exemption and determined the prescribed method which were fulfilled by the Respondent. The Honble Supreme Court in the case of M/s Vadilal Chemicals Ltd Vs State of Andhra Pradesh 2005 (192) ELT 33 (SC) held that the eligibility to exemption determined by prescribed method should not be denied based on other criteria. The relevant portion of the said decision is reproduced below:-
22.? Furthermore, under the incentive scheme in question, there was only one method of verifying the eligibility for the various incentives granted including sales tax exemption. The procedure was for the matter to be scrutinized and recommended by the State Level Committee and District Level Committee and the certification by the Department of Industries & Commerce by issuing an Eligibility Certificate. There was no other method prescribed under the scheme for determining an industrial units eligibility for the benefits granted. The Department of Industries & Commerce having exercised its mind, and having granted the final eligibility certificate (which was valid at all material times), the Commercial Taxes Department could not go beyond the same. More so when the Commissioner, Sales Tax had accepted the Eligibility Certificate issued to the appellant and had separately notified the appellants eligibility for exemption under the 1993 G.O. In these circumstances the DCCT certainly could not assume that the exemption was wrongly granted nor did he have the jurisdiction under Section 20 of the State Act to go behind the eligibility certificate and embark upon a fresh enquiry with regard to the appellants eligibility for the grant of the benefits. The counter affidavit filed by the respondents-sales tax authorities is telling. It is said that the Sales Tax Department had decided to cancel the eligibility certificates for sales tax incentives. As we have said the eligibility certificates were issued by the Department of Industries and Commerce and could not be cancelled by the Sales Tax Authorities. [See in this connection : Apollo Tyres v. CIT, Kochi, (2002) 9 SCC 1).
7. We find from the agreement, other documents and the detailed findings that there is no dispute that the Respondents supplied the materials in the project of M/s GIPL. It is a composite nature of the job and the bills and payment were made as per the agreement. The said invoices are accepted by the Sales Tax Authorities at Delhi. There is no dispute that the Respondents paid the additional duty of customs and also paid the VAT. In these circumstances, the benefit of exemption notification cannot be denied. The Customs authority cannot go beyond the sale transactions by disputing the nature of sales.
8. In view of the above discussion, we find that there is no reason to interfere the orders of the both the authorities below. Accordingly, the appeal filed by the Revenue is rejected. The cross objection also gets disposed of.
(Dictated & Pronounced in Court)
(H.K. Thakur) (P.K. Das)
Member (Technical) Member (Judicial)
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