Custom, Excise & Service Tax Tribunal
Servo Packaging Ltd vs Commissioner Of Gst &Amp; ... on 5 February, 2020
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT NO. I
Excise Appeal No. 41700 of 2019
(Arising out of Order-in-Appeal No. 326/2019 (CTA-I) dated 17.10.2019 passed by the
Commissioner of G.S.T. & Central Excise (Appeals-I), 26/1, Mahatma Gandhi Marg,
Nungambakkam, Chennai - 600 034)
M/s. Servo Packaging Limited, : Appellant
88/1, Cuddalore Pondy Main Road,
Kattupakkam, Manapet (Post)
Puducherry - 607 402
VERSUS
The Commissioner of G.S.T. and Central Excise, : Respondent
Puducherry Commissionerate, No. 1, Goubert Avenue, Beach Road, Puducherry - 605 001 APPEARANCE:
Shri. V. Ravindran, Advocate for the Appellant Ms. Sridevi Taritla, Authorized Representative (A.R.) for the Respondent CORAM:
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL) FINAL ORDER NO. 40098 / 2020 DATE OF HEARING: 24.01.2020 DATE OF DECISION: 05.02.2020 This appeal is filed by the assessee against the denial of refund of Countervailing Duty (CVD) and Special Additional Duty (SAD) of Rs. 22,24,104/-.
2. Brief facts leading to the present controversy are, the assessee made a request for refund of the Customs Duty paid, due to unfulfilled export obligation against Advance Authorization, under Section 142 (3) of the C.G.S.T. Act, 2017. The assessee-appellant could not fulfil 2 its export obligation in some cases, as per annexure to its request for refund dated 16.05.2019, owing to lack of export orders, which prompted the appellant to pay off the Customs Duties on account of short export and thereby close the export obligation under the above Advance Licences. It is also an admitted fact that the above Customs Duty was paid along with appropriate interest. It is the case of the appellant that since the inputs imported by it were used in the manufacture of final products on which Central Excise Duty/G.S.T., as the case may be, was paid/to be paid, they were eligible for refund of CVD and SAD paid. Further, post the introduction of G.S.T, the appellant having left with no option to claim the above credit under the CENVAT Credit Rules with also no scope to report the same under Transitional Credit while migrating to G.S.T., the refund in cash was claimed under Section 142 (3) ibid.
3. The Adjudicating Authority vide communication dated 06.06.2019 after considering the contentions of the appellant insofar as refund was concerned, intimated that the refund claim of the assessee of Customs Duty (i.e., CVD and SAD) which were legitimately payable, having been paid for non-fulfilment of the conditions of import under Advance Licence, was not covered under Section 142 ibid and consequently, the refund was rejected. Aggrieved, the assessee preferred an appeal before the Commissioner of G.S.T. and Central Excise (Appeals-I), Chennai, who vide impugned Order-in-Appeal No. 326/2019 (CTA-I) dated 17.10.2019 upheld the rejection. Consequently, the present appeal is filed before this forum.
4. When the matter was taken up for hearing, Shri. V. Ravindran, Ld. Advocate, appeared for the assessee- appellant and Ms. Sridevi Taritla, Ld. Joint Commissioner (Authorized Representative), appeared for the Revenue- respondent.
5. Ld. Advocate for the appellant reiterated the grounds and contentions urged before the lower 3 authorities. He also submitted that when the import was made and the applicable duty was paid, the same would tantamount to a normal import and hence, the CENVAT Credit would remain available. He also relied on the following decisions of various Benches of the Tribunal :
(i) T2S Software Solutions Pvt. Ltd. v. Commr. of G.S.T. & Central Excise [2019 (7) T.M.I. 1299 - CESTAT Chennai];
(ii) Rawalwasia Ispat Udyog Pvt. Ltd. V. C.C.E., Panchkula [2019 (7) T.M.I. 1242 - CESTAT Chandigarh];
(iii) JMT Consultant Detailing Pvt. Ltd. v. Commr. of Central Tax, Bengaluru East [2019 (12) T.M.I. 648 - CESTAT Bangalore];
(iv) German Remedies Ltd. v. C.C.E., Goa [2004 (177) E.L.T. 539 (Tri. - Del.)]
6.1 Per contra, Ld. Authorized Representative for the Revenue supported the findings of the lower authorities. Ld. Authorized Representative also pointed out that by Advance Authorization, the appellant was permitted to import without payment of duty which the assessee has done, but the same was subject to the condition of fulfilling export obligation of the final product; that the appellant having not fulfilled the said obligation, the same has rightly suffered Customs Duty because of the duty free import.
6.2 With regard to the cases relied on by the assessee, she would submit that the decisions are on refund per se under Rule 5 of the CENVAT Credit Rules, 2004 and hence, the same ratio is not applicable to a refund of duty arising on account of non-fulfilment of export obligation under Advance Authorization.
7. In rejoinder, Ld. Advocate would submit that the Advance Licence was always renewed and there is no finding by the lower authorities as regards the lapse of the period prescribed for export. Moreover, he would submit, that the appellant had voluntarily paid the Customs Duty because the appellant did not get export 4 order and the voluntariness has never been questioned by the lower authorities.
8.1 Heard both sides. The only issue to be decided is, "whether the appellant has made out a case for refund under Section 142 (3) ibid, of the Customs Duty paid in view of non-fulfilment of its export obligations?"
8.2 None of the decisions relied on by the assessee are dealing with the refund arising on account of failure to comply with export obligation vis-à-vis Advance Authorization and therefore, as pointed out by the Ld. Authorized Representative for the Revenue, the same are not applicable to the facts of this case.
9.1 Advance Authorization is issued in terms of paragraph 4.03 of the Foreign Trade Policy [FTP (2015-
20)] and the relevant Notification is Notification No. 18/2015-Cus. dated 1st April, 2015. The said Notification exempts materials imported into India against a valid Advance Authorization issued by the Regional Authority in terms of paragraph 4.03 of the FTP subject to the conditions laid down thereunder. One of the conditions, as per clause (iv), is that it requires execution of a bond in case of non-compliance with the conditions specified in that Notification. Further, paragraph 2.35 of the FTP also requires execution of Legal Undertaking (LUT)/Bank Guarantee (BG) : (a) Wherever any duty free import is allowed or where otherwise specifically stated, importer shall execute, Legal Undertaking (LUT)/Bank Guarantee (BG)/Bond with the Customs Authority, as prescribed, before clearance of goods.
9.2 Further, there is no dispute that the above is guided by the Handbook of Procedure ('HBP' for short) and paragraph 4.50 of the HBP prescribes the payment of Customs Duty and interest in case of bona fide default in export obligation (EO), as under :
"(a) Customs duty with interest as notified by DoR to be recovered from Authorisation holder on account of regularisation or enforcement of BG / LUT, shall be 5 deposited by Authorisation holder in relevant Head of Account of Customs Revenue i.e., "Major Head 0037 -
Customs and minor head 001-Import Duties" in prescribed T.R. Challan within 30 days of demand raised by Regional / Customs Authority and documentary evidence shall be produced to this effect to Regional Authority / Customs Authority immediately. Exporter can also make suo motu payment of customs duty and interest based on self/own calculation as per procedure laid down by DoR."
10. Thus, the availability of CENVAT paid on inputs despite failure to meet with the export obligation may not hold good here since, firstly, it was a conditional import and secondly, such import was to be exclusively used as per FTP. Moreover, such imported inputs cannot be used anywhere else but for export and hence, claiming input credit upon failure would defeat the very purpose/mandate of the Advance Licence. Hence, claim as to the benefit of CENVAT just as a normal import which is suffering duty is also unavailable for the very same reasons, also since the rules/procedures/conditions governing normal import compared to the one under Advance Authorization may vary because of the nature of import.
11. The import which would have normally suffered duty having escaped due to the Advance Licence, but such import being a conditional one which ultimately stood unsatisfied, naturally loses the privileges and the only way is to tax the import. The governing Notification No. 18/2015 (supra), paragraph 2.35 of the FTP which requires execution of bond, etc., in case of non-fulfilment of export obligation and paragraph 4.50 of the HBP read together would mean that the legislature has visualized the case of non-fulfilment of export obligation, which drives an assessee to paragraph 4.50 of the HBP whereby the payment of duty has been prescribed in case of bona fide default in export obligation, which also takes care of voluntary payment of duty with interest as well.
6Admittedly, the inputs imported have gone into the manufacture of goods meant for export, but the export did not take place. At best, the appellant could have availed the CENVAT Credit, but that would not ipso facto give them any right to claim refund of such credit in cash with the onset of G.S.T. because CENVAT is an option available to an assessee to be exercised and the same cannot be enforced by the CESTAT at this stage.
12. There is no question of refund and therefore, I do not see any impediment in the impugned order.
13. Accordingly, the appeal is dismissed.
(Order pronounced in the open court on 05.02.2020) Sd/-
(P. DINESHA) MEMBER (JUDICIAL) Sdd