2023 (4) TMI 786 - AT - Customs

Refund claims for Special Additional Duty (SAD) allowed, penalties invalidated

Shyam Timber Pvt Ltd, Miteshkumar Vindori Thakkar, Pravinbhai Shantilal Jethwa and Miteshkumar Jitenkumar & Co. Versus C.C. -Kandla

Shyam Timber Pvt Ltd, Miteshkumar Vindori Thakkar, Pravinbhai Shantilal Jethwa and Miteshkumar Jitenkumar & Co. Versus C.C. -Kandla - TMI Issues Involved:1. Eligibility for refund of SAD (Special Additional Duty) under Notification No. 102/2007-Cus.2. Legitimacy of recovery proceedings under Section 28 of the Customs Act, 1962.3. Compliance with conditions of Notification No. 102/2007-Cus.4. Validity of penalties imposed under Sections 114A and 114AA of the Customs Act, 1962.5. Limitation period for recovery proceedings.Summary:1. Eligibility for Refund of SAD:The appellants filed refund claims for additional duty of customs (SAD) paid on imported timber under Notification No. 102/2007-Cus. The adjudicating authority denied the refunds, alleging that the appellants submitted forged documents and did not comply with the conditions of the notification. The Commissioner (Appeals) upheld this decision. The Tribunal examined whether the appellants met the conditions of the notification, including the sale of imported goods after payment of VAT/Sales Tax, and found that they had complied with all necessary conditions. The Tribunal noted that the refund sanctioning authority had verified and sanctioned the refund claims, thus the refunds were legitimate.2. Legitimacy of Recovery Proceedings:The Tribunal observed that the orders sanctioning the refund claims had attained finality up to the CESTAT level and were not further challenged by the revenue. Consequently, the recovery proceedings initiated under Section 28 of the Customs Act were deemed unjustified and illegal. The Tribunal cited the Supreme Court's decision in the case of Asian Paints (India) Ltd., which established that recovery of refunds cannot be made through fresh show cause notices without challenging the original refund orders in higher forums.3. Compliance with Conditions of Notification No. 102/2007-Cus:The Tribunal found that the appellants had complied with the conditions of Notification No. 102/2007-Cus, including payment of VAT/Sales Tax on the sale of imported goods. The discrepancies in the number of logs mentioned in the invoices were attributed to the practice of cutting and sawing logs for transportation and customer requirements. The Tribunal held that these discrepancies did not violate the conditions of the notification. The Tribunal also referenced the case of Agarwalla Timbers Pvt. Ltd. vs. Commissioner of Customs, which supported the view that sawing imported logs did not change their identity, and thus, the benefit of the notification could not be denied.4. Validity of Penalties Imposed:The Tribunal held that penalties under Sections 114A and 114AA of the Customs Act could not be imposed in the absence of mala fide intention on the part of the appellants. The Tribunal found no evidence of fraudulent intent or violation of the notification conditions by the appellants.5. Limitation Period for Recovery Proceedings:The Tribunal noted that the Commissioner (Appeals) had failed to provide a finding on the limitation period for recovery proceedings. The Tribunal emphasized that recovery actions must be initiated within the time limits prescribed by law and that the impugned orders lacked justification in this regard.Conclusion:The Tribunal set aside the impugned orders, allowing the appeals with consequential relief to the appellants. The Tribunal found no justifiable reason to uphold the orders denying the refund claims and imposing penalties. The recovery proceedings initiated by the revenue were deemed illegal and unwarranted.