2021 (11) TMI 912 - AT - Customs

Tribunal grants refund, stresses compliance with exemption rules, deems denial contrary to notification purpose.

M/s Armstrong World Industries (India) Private Limited Versus Commissioner of Customs Nhava Sheva -III

The Tribunal allowed the appeals, setting aside the impugned order and granting the refund in favor of the appellants. The decision emphasized compliance ... Refund of SAD - payment SAD through duty credit scrip is a valid discharge of duty or not - HELD THAT:- 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. The Hon’ble Delhi High Court in the case of ALLEN DIESELS INDIA PVT. LTD. VERSUS UNION OF INDIA & ORS. [2016 (2) TMI 247 - DELHI HIGH COURT], 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. There are no 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 - appeal allowed - decided in favor of appellant. Issues:Refund of Additional Duty of Customs (SAD) paid through duty credit scrips under Notification No. 102/2007-CUS - Eligibility criteria and legislative intent.Analysis:The case involved the appellant engaged in trading innovative commercial and residential solutions, importing goods subject to SAD under the Customs Tariff Act, 1975. The appellants sought a refund of SAD paid through cash and duty credit scrips, as per Notification No. 102/2007-CUS, which exempts SAD on goods sold in India. The refund was partially granted in cash but rejected for the duty credit scrips portion by the authorities. The appellants contended compliance with notification conditions and eligibility for a full refund, citing Foreign Trade Policy provisions and various judicial precedents.The appellant's argument emphasized compliance with notification conditions, timely payment of SAD, and subsequent sale in the domestic market with VAT/Sales Tax payment. They asserted that payment through duty credit scrips was a valid discharge of duty, supported by Foreign Trade Policy provisions. The appellant relied on judicial precedents like Allen Diesels India Pvt. Ltd. and Essel Mining & Industries Ltd., highlighting similar refund cases. The Revenue, represented by the Authorized Representative, stood by the lower authorities' decision to reject the refund application.Upon review, the Tribunal acknowledged the appellant's compliance with notification conditions and the legislative intent behind the exemption. The Tribunal found the denial of refund for duty credit scrips payment contrary to the notification's purpose, emphasizing the importance of fulfilling conditions for exemption benefits. Citing judicial precedents, especially Allen Diesels India Pvt. Ltd., the Tribunal held that circulars imposing additional restrictions beyond the notification's scope were invalid. Consequently, the Tribunal allowed the appeals, setting aside the impugned order and granting the refund in favor of the appellants.In conclusion, the Tribunal's detailed analysis focused on the legislative intent behind the exemption notification, emphasizing compliance with conditions for refund eligibility. By referencing relevant legal provisions and judicial precedents, the Tribunal upheld the appellant's claim for a full refund of SAD, including the portion paid through duty credit scrips, highlighting the importance of adhering to statutory requirements for duty exemptions.