Refund claim under Notification 102/2007-Cus cannot be rejected solely for missing ADC endorsement on invoices

CESTAT Chennai held that refund claim under Notification No. 102/2007-Cus could not be rejected solely for lack of endorsement regarding ADC on sales invoices. The tribunal distinguished between statutory prerequisites essential to statute's object and procedural requirements meant for orderly conduct. Following SC precedent in CCE v. Hari Chand Shri Gopal and Division Bench decision in Novo Nordisk, the tribunal ruled that substantive exemption benefits cannot be denied due to technical infractions or procedural discrepancies. The department could have verified discrepancies in CA certificate through simple inquiry rather than rejecting the claim. Appeal allowed, impugned order set aside.

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Issues:
Question of strict compliance vs substantial compliance of refund procedures.

Analysis:
The appellant filed a refund claim for 4% Additional Duty of Customs (ADC) paid for importing Galvanized Steel Coils/Strips. The claim was rejected due to discrepancies, including lack of endorsement on sales invoices regarding inadmissibility of CENVAT credit, missing grade and coating particulars, and absence of sizes of imported goods on some invoices. The appellant argued that as traders, they are not registered with Central Excise Authorities and cannot issue CENVAT invoices. They contended that the purpose of the exemption was to ensure no double taxation on imported goods. The appellant cited various judgments supporting their position. The Tribunal noted the issue of strict vs substantial compliance, emphasizing that essential statutory prerequisites must be met. However, procedural requirements can be fulfilled through substantial compliance.

The Tribunal examined the post-import procedure for import duty exemption, noting that some relaxation could be provided to importer traders with proper verification. The submission of a Chartered Accountants (CA) Certificate was prescribed by the revenue for verification purposes. The Tribunal highlighted that the exemption aims to prevent double benefits, where the buyer claims credit while the seller seeks a refund. Citing a previous case, the Tribunal emphasized that the object and purpose of the declaration should guide the refund eligibility. In this case, the major discrepancy was the lack of period particulars in the CA's certificate, which could have been easily verified by the department. Rejecting the claim solely on procedural grounds was deemed harsh, and the Tribunal emphasized following previous decisions and principles of judicial discipline.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, stating that the appellant is eligible for consequential relief. The decision was pronounced in open court on 02.08.2024.

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