2013 (2) TMI 496 - HC - Customs

High Court Upholds Tribunal Decision on Tax Appeal Case for Sawing Imported Logs

The High Court affirmed the Tribunal's decision in a tax appeal case regarding the transformation of imported round logs into sawn timber for sale in the ... Notification No.102/2007Cus – Transformation of the imported round logs into sawn timber by the importer before subsequent sale to domestic market – Whether it would vitiate the condition of subsequent sale prescribed in exemption notification No.102/2007Cus – Held that:- Importer were, under the law, obliged to reduce the length of the timber before its transport - Importer imported the goods after paying SCVD - At the time of its sale in the local market, they also paid local taxes - Before transportation of timber, they were required to reduce its size since the RTO rules did not permit transportation of logs longer that 40feet – Exemption would be available – Against the revenue. Issues:- Whether transformation of imported round logs into sawn timber before sale to domestic market vitiates exemption condition.- Whether Tribunal erred in relying on a previous decision for eligibility under exemption notification.- Whether Tribunal erred in not considering interpretation of exemption notification based on Apex Court's ratio.- Whether Tribunal's order, passed without considering all submissions, is valid.Analysis:1. The Department appealed against the Tribunal's judgment, questioning the transformation of imported round logs into sawn timber before sale to the domestic market. The issue was whether this transformation would violate the condition of subsequent sale as per the exemption notification. The Tribunal had relied on a previous decision to support the importer's eligibility under the exemption notification.2. The High Court noted that the issues raised in the present appeal were similar to those addressed in a previous group of Tax Appeals. In that previous judgment, the Court found that the transformation of raw logs into smaller pieces by sawing did not result in a new product. The Court also considered the necessity of reducing timber length for transportation purposes and the payment of relevant taxes by the importers. Ultimately, the Court dismissed the Department's appeal, affirming the Tribunal's decision.3. The High Court emphasized that the Tribunal's decision was based on the fact that the importers did not breach any conditions of the exemption notification by sawing the logs into smaller pieces for sale in the local market. The Court found no error in the Tribunal's view and consequently dismissed the appeals.4. Given the commonality of issues and the alignment with the previous judgment, the High Court swiftly dismissed the present Tax Appeal without providing detailed reasons. As a result, the Civil application was also dismissed in line with the Tax Appeal decision.