Procedural invoice endorsement under SAD refund notification cannot defeat exemption when commercial invoices omit duty details and other conditions are met

The refund under Notification No. 102/2007-Cus is not defeated merely because a trader-importer issued commercial invoices without the endorsement that CENVAT credit of the special additional duty is inadmissible, where the imported goods were later sold on payment of VAT or sales tax and the duty element was not shown in the invoices. The endorsement requirement was treated as procedural because its object is to prevent double benefit, and that object is not frustrated when credit could not have been availed on the face of a commercial invoice. The benefit remains available if the other conditions of the notification are satisfied.

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Issues: Whether refund of special additional duty under Notification No. 102/2007-Cus can be denied merely because a trader-importer issued commercial invoices without the endorsement that credit of the additional duty is not admissible, when the imported goods were subsequently sold on payment of VAT/sales tax and no duty particulars were shown in the invoices.

Analysis: The exemption under the notification operates to neutralise the burden of double levy on imported goods subsequently sold in the domestic market. The endorsement requirement in the sale invoice serves the object of preventing double benefit by ensuring that the buyer does not take CENVAT credit of the SAD paid. Where the invoice is only a commercial invoice and does not disclose the duty element at all, credit could not in any event be availed on its strength. The endorsement requirement was therefore treated as procedural, and its non-compliance did not defeat the substantive purpose of the notification. The condition had to be construed in light of the object of the levy and the exemption, with procedural infractions not overriding the benefit when the underlying purpose was satisfied.

Conclusion: The trader-importer was entitled to the refund benefit under Notification No. 102/2007-Cus notwithstanding the absence of the invoice endorsement, subject to fulfilment of the other conditions of the notification.

Final Conclusion: The reference was answered in favour of the importer by holding that non-mention of the endorsement on commercial invoices, by itself, does not defeat the exemption when the duty element is not specified and the other conditions are satisfied.

Ratio Decidendi: A procedural condition in an exemption notification will not defeat the exemption where compliance with its underlying object is otherwise achieved and denial would frustrate the purpose of the refund mechanism.

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