2016 (2) TMI 390 - AT - Customs

Tribunal Upholds SAD Re-Credit Pre-Circular 18/2013, Emphasizes Benefit Over Procedure

Commissioner of Customs, Goa Versus M/s Birla Furukawa Fiber Optics Ltd.

The Tribunal upheld the Commissioner (Appeals) order, allowing re-credit of Special Additional Duty (SAD) for duties paid before Circular No. 18/2013-Cus ... Refund of SAD - Notification No. 102/07-Cus dated 14.9.2007 - Validity of Circular No. 18/2013-Cus dated 29.4.2013 - The said refund claims were rejected by the Assistant Commissioner on the grounds that payment of 4% SAD has not been made by cash, but has been paid using the Reward Scrip i.e. Focus Product Scheme. The entire grounds of appeal are based on Circular issued by Board and at no stage they rely or even cited the provisions of any Notification or Rules. The Tribunal in case of M.B. Enterprise [2015 (12) TMI 578 - CESTAT AHMEDABAD] has rightly observed that there is no condition in Notification No. 102/07 that SAD should initially be paid through cash. The Tribunal has further observed that a right given under any Notification cannot be taken away by issue of Circular. - Decided against the revenue. Issues Involved: Refund of Special Additional Duty (SAD), Utilization of Reward Scrips, Compliance with Circulars, Interpretation of Notifications and Circulars, Procedural Infractions, and Re-credit of SAD.Issue 1: Refund of Special Additional Duty (SAD)M/s Birla Furukawa Fiber Optics Ltd. imported goods and paid the applicable 4% SAD. They sought refunds under Notification No. 102/07-Cus dated 14.9.2007. The Assistant Commissioner rejected their refund claims because the SAD was paid using the Reward Scrip (Focus Product Scheme) and not in cash. According to Circular No. 18/2013-Cus dated 29.4.2013, credits in reward scrips for 4% SAD could only be utilized up to 30.9.2013. Since the refund application was filed on 5.11.2013, the credit could not be given after the last date for using the credited amount from the scrips. However, a refund was allowed for the part of SAD paid in cash.Issue 2: Utilization of Reward ScripsThe Commissioner (Appeals) allowed the appeal by M/s Birla Furukawa Fiber Optics Ltd. on the grounds that substantial benefits should not be denied for procedural infractions. The Commissioner noted that the denial of re-credit should not apply to cases where duty was paid before Circular No. 18/2013-Cus dated 29.4.2013. The Commissioner emphasized that while re-credit could be granted, its utilization would be governed by the policy of the CBEC.Issue 3: Compliance with CircularsThe adjudicating authority based its decision on Circular No. 18/2013-Cus, which reiterated that initial payment of 4% CVD should be made in cash for expeditious refunds. However, the Commissioner (Appeals) found that the adjudicating authority did not correctly construe the Board's Circular. The Commissioner observed that earlier circulars advised payment of duty in cash for expeditious refunds but did not preclude importers from paying SAD through scrips and getting refunds.Issue 4: Interpretation of Notifications and CircularsThe Commissioner (Appeals) interpreted that the term 'in future' in Circular 18/2013 meant no re-credit would be allowed for SAD paid through scrips after 29.4.2013. The Commissioner also referred to the amended paragraph 2.13.2A of the Handbook of Procedures, which indicated that freely transferable duty credit scrips would be revalidated till 30.9.2013 for the purpose of utilization of re-credit of 4% SAD.Issue 5: Procedural InfractionsThe Commissioner (Appeals) held that procedural provisions should not be fatal to substantial benefits, considering the imports were made more than a year ago. The Commissioner emphasized that Notification No. 102/2007-Cus provided a one-year timeframe to file refund claims, which should be considered.Issue 6: Re-credit of SADThe Revenue appealed against the Commissioner (Appeals) order, arguing that it was contradictory and against the instructions issued by the Board and DGFT. The Revenue contended that the Commissioner (Appeals) allowed re-credit for duties paid after Circular No. 18/2013-Cus dated 29.4.2013 and noted that if the utilization period for such scrips was not extended, re-credit would be of no use.Separate Judgments Delivered by Tribunals:- Faxtel Systems India Pvt. Ltd. vs. Commissioner of Customs, Bangalore: The Tribunal observed that re-credit should be allowed regardless of whether the DEPB scrip had expired, leaving it to the assessee/importer to approach the DGFT for credit.- M.B. Enterprise: The Tribunal held that there was no condition in Notification No. 102/2007-Cus that SAD should be initially paid through cash and that a right given under an exemption notification could not be taken away by departmental circulars.Final Judgment:The Tribunal upheld the Commissioner (Appeals) order, stating that the grounds of appeal were based on circulars and not on any notification or rules. The Tribunal reiterated that a right given under a notification could not be taken away by a circular and dismissed the appeals filed by the Revenue.