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Judgment
Briefly stated, the facts of the case are that the appellants herein is engaged interalia, in the business of trading of innovative commercial and
residential ceilings, wall and suspension system solutions. The appellants regularly imports such goods from the suppliers located abroad and sales the
same to the Indian buyers. On clearance of the imported goods, the appellants discharges appropriate duty liability, including Additional Duty of
Customs (SAD) levied under Section 3(5) of the Customs Tariff Act, 1975. The Central Government vide Notification No. 102/2007-CUS., dated
14.09.2007 as amended by Notification No. 93/2008-CUS., dated 01.08.2008, has provided exemption from payment of SAD amount on the imported
goods, when those are subsequently sold in India. The exemption benefit provided under the said notifications is subject to fulfillment of the conditions
itemized therein. During the disputed period, the appellant had filed the Bills of Entry and paid the SAD amount of Rs.67,56,488/-. The said amount
was paid partly in cash and partly by utilizing the duty credit scrips. In terms of the above referred notifications, the appellants had filed the refund
application before the jurisdictional authorities, claiming refund of SAD amount of Rs,.67,56,488/-. The refund sanctioning authority vide order dated
11.04.2017 had sanctioned the refund amount of Rs.3,16,907/- paid in cash by the appellants and rejected the claimed amount of Rs.64,39,581/- paid
through DEPB/FPS Scripts. The original authority vide the said order had held that the importer is not eligible for the benefit of refund, when the duty
amount was paid through the scripts. On appeal against the said order, the learned Commissioner (Appeals) vide the impugned order dated 20.08.2018
has upheld the adjudication order and rejected the appeal filed by the appellants. The learned Commissioner (Appeals) has relied upon the circulars
dated 13.08.2010, 29.03.2012, 29.04.2013 issued by CBEC for rejecting the appeals filed by the appellants. Feeling aggrieved with the impugned order,
the appellants have filed these appeals before the Tribunal.
The learned Advocate appearing for the appellants submitted that the conditions of the notifications have been duly complied with inasmuch as the
SAD amount in respect of the imported goods were paid before clearance of the goods from the port’s custody; that the imported goods were
sold in the domestic market on payment of appropriate VAT/Sales Tax and accordingly, the appellants should be eligible for grant of refund in terms
of the aforementioned notifications. The learned Advocate further submitted that the payment SAD through duty credit scrip is a valid discharge of
duty amount in terms of para 3.02 of Foreign Trade Policy 2015-2020. He has also relied upon the following judgments delivered by the judicial forum:
(i) Allen Diesels India Private Limited Vs. Union of India [2016 (334) ELT 624 (Del.)]
(ii) Essel Mining & Industries Ltd. [2012 (5) TMI 328 â€" BOMBAY HIGH COURT]
(iii) Arihant Tiles & Marbles Pvt. Ltd. Vs. C.C. Mundra [2018 (8) TMI 634 â€" CESTAT Ahmedabad
(iv) Commissioner of Customs (Appeals) Ahmedabad Vs. Proflex Systems [2017 (10) TMI 1202 â€"CESTAT Ahmedabad
(v) Molex India Pvt. Ltd. C.C-Bangalore-Cus. [2018 (6) TMI 1374 â€" CESTAT Bangalore
(vi) M/s. Enterprises International Ltd. Vs. The AC, Customs (Exports), The Deputy Commissioner of Customs (Refunds) [2016 (10) TMI 24 â€
Madras High Court]
(vii) M/s. Sivagurunathan Textiles Ltd. Vs. CCE, Cehnnai-II [2014 (10) TMI 125 â€" CESTAT Chennai]
(viii) Notification No. 102/2007-Customs, dated 14.09.2007
(ix) Various Circulars Issued by the CBEC â€" 6/2008, 10/2012 and 18/2013
(x) Commissioner of Customs, Goa Vs. M/s. Birla Furukawa Fiber Optics Ltd. Appeal No. C/90077 & 90079/14 dated 22.12.2015
On the other hand, the learned AR appearing for the Revenue reiterated the finding recorded in the impugned order in support of rejection of refund
application by the authorities below.
Heard both sides and perused the records.
It is an undisputed fact on record that the disputed goods imported by the appellants on payment of SAD were sold in the domestic market on
discharge of appropriate VAT/Sales Tax amount levied by the respective State Governments. Further, the conditions itemized in the notification dated
14.07.2007 as amended, have been duly complied with by the appellants, as a result, the original authority had sanctioned the refund claim with regard
to the SAD amount paid in cash. The base notification dated 17.09.2007 and the amending notification nowhere specified that cash refund should not
be considered, in the eventuality, when the same was paid by using the duty credit scrips. Since the legislative intent is to extend the benefit of
exemption upon fulfillment of certain conditions, denial of such benefit in absence of any express provisions in the statute defeats the very purpose of
such legislation. Thus, we are of the considered opinion that the benefit of duty exemption provided in the above notification should be available to the
appellant, even though the SAD amount was paid by using the duty credit scrips. We find that the issue arising out of the present dispute is no more
res integara in view of the above judgments relied upon by the appellants. The Hon’ble Delhi High Court in the case of Allen Diesels India Pvt.
Ltd. (supra), in an identical case, has held that upon fulfillment of the requirements contained in the notification, the benefit of refund should be
available to the claimant. It has further been held that the circulars issued by CBEC, imposing additional restrictions for the availment of the benefit of
the duty exemption cannot be acted upon inasmuch as an amendment to the notification can only be issued in exercise of the powers contained in
Section 25(1) of the Customs Act, 1962 and not otherwise. The relevant paragraphs in the said judgments are extracted herein below:
“16. Although it is sought to be projected that the circulars which are subject matter of the challenge in the present petitions were issued
to streamline the procedure and to remove ambiguities, in fact what the circulars seek to amend is Notification No. 102/2007-Customs itself
by introducing an additional condition for being entitled to refund, which condition does not find place in Notification No. 102/2007-
Customs. This condition is to the effect that if the payment of the SAD has in the first place not been made in cash, but by using a DEPB
scrip, then the importers concerned would not be entitled to refund of SAD in cash. It is not in dispute that there is no such restriction in
Notification No. 102/2007-Customs even as on date.
Therefore, the legal position as explained in the above decisions makes it clear that the Circular Nos. 6/2008, 10/2012 and 18/2013
issued by the CBEC could not have imposed an additional restriction for availing of the exemption in terms of the Notification No.
102/2007- Cus issued under Section 25(1) of the Act. An amendment to a notification issued in exercise of the powers under Section 25 (1)
of the Act has to be brought about only by issuing another notification under that provision. Inasmuch as the circulars under challenge
seek to impose an additional restriction for grant of refund of the SAD under Notification No. 102/2007-Customs, they are ultra vires of the
Act and cannot be legally sustained. Consequently, it is declared that the Circular Nos. 6/2008, 10/2012 and 18/2013 issued by the CBEC,
insofar as they seek to deny importers and exporters the refund of the SAD paid by using DEPB scrips, are invalid.
The rejection of the Petitioner's refund applications by the orders dated 16th May 2014 and 20th May 2014, on the above grounds, is
held to be bad in law and the said orders are hereby set aside. Since the Petitioner has fulfilled the conditions set out in Notification No.
102/2007-Customs for availing of the refund, the Department is directed to issue orders granting refund to the Petitioner, as prayed for by
it in its four refund applications dated 8th October 2013, 22nd November 2013, 16th December 2013 and 21st December 2014 not later
than four weeks from today. The Petitioner's entitlement to interest on the amount of refund will also be considered and granted in
accordance with law within the same period of four weeks from today.â€
In view of the settled position of law (referred supra), we do not find any merits in the impugned order, insofar as it has rejected the appeal filed by
the appellants in denying the refund benefit arising out of the notification dated 14.09.2007, as amended. Therefore, by setting aside the impugned
order, the appeals are allowed in favour of the appellants.
(Order pronounced in the open court on 22/11/2021)