2018 (11) TMI 1531 - AT - Customs

DTA Unit Granted Refund of SAD on SEZ Transfers Under Customs Law

The Tribunal allowed the appeal, granting the appellant's Domestic Tariff Area (DTA) unit the refund of Special Additional Duty (SAD) paid on goods ... SEZ unit - refund of SAD - N/N. 102/2007-Cus dated 14.09.2007 - rejection of refund on the ground that no statutory provision exist either in SEZ Act, 2005 or the Rules and Regulations made there under - Held that:- The major requirement of Notification No. 102/2007 stands fulfilled that the DTA unit that is indeed an importer as per SEZ Act, 2005 and the goods received by DTA were duly SAD paid. The DTA unit has further sold such goods on payment of Sales Tax/ VAT - The lower authorities rejected the claim on the ground which apparently not tenable. Jurisdiction - Held that:- The DTA Unit of the appellant i.e. unit situated at Bhimasar had correctly filed the refund claim dated 12.12.2013 with the Adjudicating Authority therefore, on this ground refund cannot be rejected. Non-compliance with the condition mentioned at Point (vii) of Circular No. 16/2008-Cus dated 13.10.2008 - Held that:- This condition is applicable when the goods are sold by a consignment agent, which obviously other than own company. In the present case, the goods were supplied by SEZ unit and received by DTA unit of the same company who sold the goods in the market therefore, in the transaction, consignment agent does not exist. The question of fulfilling a condition mentioned at point (vii) of the Circular dated 13.10.2008 does not arise. Therefore, on this count also the lower authorities have gravely erred in rejecting the refund claim. Rejection of refund claim also on the ground of transfer of goods from SEZ to DTA unit is not an import - Held that:- As per SEZ Act, 2005 and the legal fiction provided therein, the supply made from SEZ is treated as import for the receiving DTA unit and in case of any supply from DTA to SEZ, the same is treated as export - supply of goods from Special Economic Zone (SEZ) to Domestic Tariff Area (DTA) is eligible for exemption Notification No. 102/2007-Cus and consequently, the DTA unit is entitled for the refund of Special Additional Duty of customs paid on such supply. Refund cannot be rejected - appeal allowed - decided in favor of appellant. Issues Involved:1. Eligibility of refund claim for Special Additional Duty (SAD) under Notification No. 102/2007-Cus.2. Jurisdiction and procedural compliance in filing the refund claim.3. Interpretation of the term 'importer' and applicability of SEZ Act, 2005.Detailed Analysis:1. Eligibility of Refund Claim for Special Additional Duty (SAD) under Notification No. 102/2007-Cus:The appellant's unit in Kandla Special Economic Zone (SEZ) cleared goods to its Domestic Tariff Area (DTA) unit, paying a 4% Special Additional Duty (SAD) of Customs. The DTA unit subsequently sold these goods in the domestic market, paying the appropriate Sales Tax/VAT. The appellant sought a refund of the SAD under Notification No. 102/2007-Cus. The lower authorities initially rejected the claim, stating that the refund was not filed by the importer as specified under the notification. However, it was argued that the DTA unit, being the importer in the context of SEZ to DTA transactions, was eligible for the refund. The Tribunal found that the DTA unit indeed fulfilled the major requirements of the notification, as the goods were sold on payment of Sales Tax/VAT, and thus, the refund claim was legitimate.2. Jurisdiction and Procedural Compliance in Filing the Refund Claim:The lower authorities also rejected the refund claim on the grounds of non-compliance with Point (vii) of Circular No. 16/2008-Cus, which pertains to consignment agents. The appellant contended that since there was no consignment agent involved, this point was not applicable. The Tribunal agreed, stating that the goods were transferred within the same company from SEZ to DTA, and thus, the condition regarding consignment agents did not apply. Furthermore, the Gujarat High Court had already decided that the DTA unit correctly filed the refund claim, establishing the jurisdictional correctness of the claim.3. Interpretation of the Term 'Importer' and Applicability of SEZ Act, 2005:The lower authorities argued that the transfer of goods from SEZ to DTA did not constitute an import. The Tribunal, however, referred to the SEZ Act, 2005, which legally treats such transfers as imports for the receiving DTA unit. This interpretation was supported by the Tribunal's earlier judgment in Adinath Trade Link vs. CC, Kandla, which held that the movement of goods from SEZ to DTA is considered an import, making the DTA unit eligible for the refund of SAD paid under Notification No. 102/2007-Cus. The Tribunal emphasized that the legislative intent behind the notification was to refund SAD to importers who resell the goods domestically, which includes goods moved from SEZ to DTA.Conclusion:The Tribunal concluded that the appellant's DTA unit was entitled to the refund of SAD paid on goods received from the SEZ unit, as all conditions of Notification No. 102/2007-Cus were met. The rejection by the lower authorities was deemed incorrect on multiple grounds, including misinterpretation of procedural requirements and the legal definition of 'import' under the SEZ Act. The appeal was allowed with consequential relief, setting aside the impugned order.Order Pronounced:(Order pronounced in the open court on 27.11.2018)