TaxTMI 
TaxTMI 
TaxTMI 
2010 (9) TMI 950
X X X X Extracts X X X X
X X X X Extracts X X X X
...., provided for refund subject to the conditions laid down therein. It was observed from the scrutiny of the documents filed along with the refund claims that the imported goods were round logs whereas the goods sold were in the form of sawn timber and therefore, the identity of the goods sold and the ones imported were different and no co-relation between the imported goods and goods sold could be established. Accordingly, show cause notices were issued proposing to reject the refund claims under Section 27 of the Customs Act, 1962 (hereinafter referred to as the Act) and after due process of law, the same were adjudicated vide the impugned orders-in-original wherein the amount of refunds claimed were rejected by the Assistant Commissioner for non-fulfillment of the requirement of subsequent sale specified in the Notification No.102/2007-Cus dated 14.09.07. 3. The appeals filed by the appellants against the rejection of refund claims have been rejected by the Commissioner (Appeals) in various orders. 4. Heard the learned advocates for the appellants and the learned DR for Revenue and also considered the relevant records and the decisions cited by both the sides. 5. There is no d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n respect of which refund of the said additional duty is claimed; (iii) documents evidencing payment of appropriate sales tax or value added tax, as the case may be, by the importer, on sale of such imported goods." 6. As may be seen from the Notification, when goods are imported for subsequent sale, the refund of the SCVD paid will be available to the importer. The only condition that is not fulfilled according to the Revenue by the appellants is that goods have been sold subsequently but not in the same form in which they were imported. According to the Revenue refund can be paid only when the same imported goods are sold subsequently in view of the clause when imported into India for subsequent sale used in the notification. The learned Commissioner (Appeals) in his order 557 570/2009 dated 31.12.09 after considering the HSN explanatory notes, Customs Tariff sub heading 4403 and Customs Tariff sub heading 4407, has observed that there is merit in the findings of the adjudicating authority that the imported round logs falling under CTH 4403 when subjected to sawing in different sizes and length completely change identity as round longs and w....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... proposed to be levied as sawn timber under CETH 4407, the department would be required to show that the process amounted to manufacture and new commodity with distinct, character, name and use has emerged. Therefore it can be said that if the process did not amount to manufacture and was not liable to duty in the Erstwhile Tariff, the same principles would apply today also in view of the fact that the definition of manufacture has not changed and the decisions of the Hon'ble Supreme Court with regard to the word manufacture hold the field throughout the period. Under these circumstances, the claim of the appellants that sawn timber remains under CETH 4403 has not been rebutted effectively. Further it is also settled law that whether a process amounts to manufacture or not has to be established by the department and not by the appellants. Therefore the departments contention that the sawn timber after the process undertaken by the appellants has become a new commodity with distinct, name, character and use and therefore requires to be classified under CETH 4407 and ceases to be classifiable under 4403 has to be held as not established. Other than discussing the description of both ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... eligible for exemptions. These would be examined and if considered appropriate notified separately. Section 3A(1) as enacted read as under:- 3A. Special additional duty. (1) Any article which is imported into India shall in addition be liable to a duty (hereinafter referred to in this section as the special additional duty), which shall be levied at a rate to be specified by the Central Government, by notification in the Official Gazette, having regard to the maximum sales tax, local tax or any other charges for the time being leviable on a like article on its sale or purchase in India: Provided that until such rate is specified by the Central Government, the special additional duty shall be levied and collected at the rate of eight per cent of the value of the article imported into India. Explanation. In this sub-section, the expression maximum sales tax, local tax or any other charges for the time being leviable on a like article on its sale or purchase in India means the maximum sales-tax, local tax, other charges for the time being in force, which shall be leviable on a like article, if sold or purchased in India, or if a like article is not so sold or purchased which shal....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the expression sales tax, value added tax, local tax or any other charges for the time being leviable on a like article on its sale, purchase or transportation in India means the sales tax, value added tax, local tax or other charges for the time being in force, which would be leviable on a like article if sold, purchased or transported in India or, if a like article is not so sold, purchased or transported, which would be leviable on the class or description of articles to which the imported article belongs, and where such taxes, or, as the case may be, such charges are leviable at different rates, the highest such tax or, as the case may be, such charge." 11. Ultimately exemption notification No.10/07-Cus dated 14.09.07 was issued providing for refund of special CVD as discussed earlier. The rationale for imposition of special CVD and the refund is that when sales tax is paid at the time of sale in India after import, the importer would be paying sales tax again and therefore to counter balance the sales tax payable refund of special CVD has been provided for. The learned advocate relied upon several decisions in support of the contention that sawing of the timber would not ren....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ods are sold as such either in the same condition or in the repacked condition, the benefit cannot be denied to them. Moreover, the purpose of levy of SAD is to make it par with the local sales on payment of sales tax. As the sales tax has been levied in the present case, the question of again levying SAD does not arise. Furthermore, we notice that the High Court of Karnataka, in the case of Lipton India Ltd. v. State of Karnataka - [1994 095 STC 0225W (Kar.)] was considering the question as to whether the process of blending, mixing and repacking the tea would convert the tea into a distinct commercial commodity. The assessee contended that they were paying Central Excise Duty on the repacked tea and, therefore, the repacked commodity was commercially different from the unpacked tea. The High Court rejected the above contention and held that tea continues to retain its identity even after the process of blending and repacking and that the definition in Central Excise Law cannot be used to interpret the Sales Tax Law. In the light of this ratio, we hold that the invocation of Chapter Note of Chapter 29 to hold that the goods are different on repacking is not a correct view taken by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....D is levied in lieu of sales tax and also the very introduction refers this fact, it would be relevant to consider the submissions made by the appellants relying upon decisions of Hon'ble High Court and Supreme Court in support of the contention that sawn timber and timber are same goods. In the case of State of Orissa and Other vs. Titaghur Paper Mills Company Ltd. and Another reported in 1985 (Supp) SCC (280) the question before the Hon'ble Supreme Court was that same goods shall not be taxed at more than one point in the same series of sale or purchase. 15. Hon'ble Supreme Court was, inter alia, considering the proviso to Section 8 of Orissa Sales Tax Act, which reads as under:- "Power of the State Government to prescribe points at which goods may be taxed or exempted- Notwithstanding anything to the contrary, in this Act, the State Government may prescribe the points in the series of sales or purchase by successive dealers at which any goods or class or description of goods may be taxed or exempted from taxation and in doing so may direct that sales to or purchases by a person other than a registered dealer shall be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion and held that timber and sawn/dressed logs are same goods: within the meaning of proviso to Section 8. 22. Supreme Court duly noted the position that under Orissa Sales Tax Act, State Government has made Rules specifying that the tax would be levied at the first point of sale and same goods shall not be taxed more than once. Supreme Court held that the timber and sized or dressed logs are one and the same commercial commodity. Supreme Court also held that merely because an item is known by different names it does not mean that they are different commercial commodities, if in fact they are different forms of same commodity. 23. It was also submitted that in the case of timber itself it has been held that change in classification after sawing is irrelevant whether they are different commodities or same commodity. 24. In Bangalore Wood Industries vs. ACCT (Assessment) MANU/KA/0129/1993 the question before the Hon'ble High Court of Karnataka was whether a dealer who purchased timber on which no sales tax was charged as per Section 5 of Karnataka Sales Tax Act is liable to pay sales tax under Section 6 when such timber is cut or sawn by him into size, log, planks etc. and sold t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the dealer was entitled for concession under Section 8 of deduction from turnover of goods sold on which purchase tax had already been paid. This decision also supports the case that even when the timber was sawn and sold, if the sales tax liability was discharged, the appellants would be eligible for refund. 30. Learned DR on behalf of Revenue drew our attention to the Circular No.15/2010-Cus dated 29.06.10 issued by the Board. In the Circular it has been stated that refund of SAD is available only in the case of imported goods are subsequently sold on payment of VAT without carrying out any process. However we notice that this circular further goes on to say that importers have manipulated the facts while claiming refund. Further, the Board also observed that round logs/round squares are classified under Heading No.4403 whereas sawn wood is classifiable separately under Heading 4407. It was on this ground that it was observed by the Board that refund of SAD would not be available. The Boards circular gives an impression that when the goods sold are having a different classification, SAD refund would not be available. As already observed by us earlier in this case, the department....