TaxTMI 
TaxTMI 
2020 (11) TMI 15
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....nctioning refund. 1.2 Show Cause Notice dated 07.02.2017 was issued to the appellant proposing to reject the refund claims. Thereafter, the Original Authority vide Order-in-Original No. 686/2017 dated 09.05.2017 rejected the refund claims on the ground that the imported 'oats' have been re-packed, fumigated and affixed with brand name and not sold "as such". Penalty under Section 114AA of the Customs Act, 1962 was also imposed. On appeal, the Commissioner (Appeals) vide order impugned herein upheld the same. Aggrieved, the appellant has preferred the present appeal before this forum. 2.1 Shri B.L. Narasimhan, Learned Counsel appearing on behalf of the appellant, made various submissions, which can be broadly summarized as under : (i) During the period in dispute, the appellant had filed a total of 23 SAD refund claims for an amount of Rs. 5,90,67,534/-, whereas, what has been taken on record is only the refund claims for an amount of Rs. 5,42,34,576/-. That the appellant ought to be allowed the refund claim for an amount of Rs. 5,90,67,534/-; (ii) There is no requirement in Notification No. 102/2007-Cus that the goods have to be sold "as such". This requirem....
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.... Act; (viii) Without prejudice to the above, it is submitted that the deeming fiction created under Section 2(f)(iii) of the Central Excise Act, 1944 and the Sub-heading Note to Chapter 11 cannot be invoked to interpret the present Notification No. 102/2007-Cus. 2.2.1 The Learned Counsel for the appellant relied on the decision of the Tribunal in the case of M/s. Kanam Latex Industries (P) Ltd. v. Commissioner of Cus., Tuticorin reported in 2018 (362) E.L.T. 882 (Tri. - Chennai) and argued that it is therein held that there is no requirement in Notification No. 102/2007-Cus. that the imported goods should be sold "as such". The Tribunal has held that refund of SAD would be admissible on imported latex gloves sold after sterilization, re-labelling and repacking even after introduction of deeming clause, deeming the activities of packing, repacking, etc., to be manufacture. The said decision has been followed by the Tribunal in the case of M/s. Olam Agro India Pvt. Ltd. v. Commissioner of Customs, Tuticorin reported in 2019 (370) E.L.T. 902 (Tri. - Chennai). It is stressed by the Learned Counsel that the process of fumigation undertaken on the imported 'oats' does not amo....
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....ld as such. 2.4.2 He pointed out that Notification No. 102/2007-Cus. only requires that the imported goods should be "for subsequent sale" and does not require the imported goods to be sold in the same packing as imported. The exemption is qua goods and the goods in this case is oats and not the packing materials thereof. Therefore, interpreting the terms "for subsequent sale" to mean sold in the same packing as imported is reading a non-existent condition into the Notification which is not permitted in law. 2.4.3 That the imported oats are merely re-packed into smaller packs for the purposes of retail sale in the market. Oats, which are imported in bulk packs of 25 kgs., cannot be sold to the consumers, as such in the same packing. It necessarily has to be re-packed into smaller packs, for the purpose of selling the same to the consumers. 2.4.4 He relied on the decision in the case of M/s. Vijirom Chem. Pvt. Ltd. v. Commr. of Cus., Bangalore reported in 2006 (199) E.L.T. 751 (Tri. - Bang.). It has been held that the goods remained "as such" even on re-packing as they had not undergone any change. The decision in M/s. Agarwalla Timbers Pvt. Ltd. v. Commissioner of Customs,....
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....und. 2.7 It is pointed out that penalty under Section 114AA of the Customs Act, 1962 has been ordered on the ground that the fact of processing activity done by co-packers on behalf of the appellant was revealed only during investigation by SIIB. The penalty under Section 114AA ibid. can be imposed only when goods are exported by forging documents knowingly or intentionally and this is not the dispute in the present case. Hence, Section 114AA of the Customs Act is not invokable. In any case, a mere claim for refund cannot be construed as making a declaration, statement or document which is false or incorrect in any material particular. Therefore, penalty under Section 114AA is not imposable on the appellant. 2.8 He prayed that the appeal may be allowed. 3.1 Shri M. Jagan Babu, Learned Authorized Representative (A.R.) appeared and argued on behalf of the Revenue. He submitted that the appellants have undertaken three types of job work as detailed below: (a) Retail packing of imported oats after fumigating the oats for certain days and repacked in various packing like 1 kilogram, 500 grams, 200 grams, etc., under the brand 'Quaker'; (b) In the second type o....
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.... open. 3.5 Regarding the imposition of penalty under Section 114AA of the Customs Act, he submitted that the claim of the appellant is that their case is one of interpretation. It is observed that while filing the refund claims, the appellant suppressed the fact of processing activity done by the job workers viz. M/s. Christy Fried Grams Industry on behalf of the appellant, which was revealed only by the investigation of the SIIB, Custom House, Tuticorin. That the said suppression with a mala fide intention deserves penalty under Section 114AA. 3.6 He argued that the appeal deserves to be dismissed. 4. We have heard both sides and perused the records. 5.1 The refund claims have been rejected on two grounds: Firstly, for the reason that the goods imported had not been sold "as such" and secondly, that the refund claims are time-barred. Before we proceed to discuss the above issues, it is noteworthy to mention that though the appellants had filed refund claims in respect of multi-grain oats and flavoured oats sold by them, they have withdrawn their contest in respect of refund of SAD paid on these oats and is confining their challenge to the refund of SAD paid on Plain Oa....
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....) document evidencing payment of the said additional duty; (ii) invoices of sale of the imported goods in 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. 3. The jurisdictional customs officer shall sanction the refund on satisfying himself that the conditions referred to in para 2 above, are fulfilled." [Emphasis added] It can be seen from the above Notification that there is no condition that the goods imported have to be sold as such. The word used is "subsequent". Thus, when an assessee pays VAT on the subsequent sale of imported goods, he may file an application for refund of the SAD paid at the time of import. 6.2.1 In the present case, the appellant has done the processes of re-packing, fumigation, affixation of brand name, etc. The Department has denied refund alleging that such processes amount to manufacture and that the goods have not been sold as such. This issue has been considered by the Tribunal in various decisions, as pointed out by the Learned Counsel for the appellan....
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....tion under Notification No. 102/2007-Cus., could not have been denied despite the fact that imported goods, subsequently, after cutting into small pieces, had fallen in a different tariff entry. Tribunal in the case of M/s. Agarwal Timbers Pvt. Ltd., has observed that as long as the identify of the article did not undergo any fundamental change, so as to conclude that what was imported by the importers were different from the item which ultimately was sold by them in the local market, the importer would be eligible for exemption under Notification No. 102/2007-Cus. Similarly in the case of Commissioner of Customs, Amritsar v. M/s. Hero Exports reported in 2013 (298) E.L.T. 410 (Tri. - Del.), the Revenue's stand that imported e-bikes in CKD condition were subsequently assembled and sold as e-bikes, thus disentitling the importer to refund of SAD was not accepted. Similarly, in the case of M/s. Posco India Delhi Steel Processing Ltd. v Commissioner of Customs, Kandla reported in 2012 (285) E.L.T. 410 (Tri.-Ahmd.), it was held that cutting and slitting of imported HR/CR coils would not disentitle the claim of refund under Notification No. 102/2007. 6. In fact, we note that th....
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....o be sold "as such", there is no such condition in the present Notification No. 102/2007, which only used the expression "subsequently sold". Inasmuch as, the imported gloves have been sold by the assessee as gloves and it is only by deeming fiction of law that the activities of labelling, relabelling, packing, repacking, etc. has been made as amounting to manufacture, we find that there is no justification to hold that the gloves have undergone any change, as held by the Tribunal in the above referred decision of M/s. Vijirom Chem. Pvt. Ltd. As such, we find no justification for denial of the refund of SAD. According, the impugned orders are set aside and both the appeals are allowed." [Emphasis added] 6.2.3 A similar decision was taken in the case of M/s. Vijirom Chem. Pvt. Ltd.(supra). 6.2.4 The Hon'ble High Court of Gujarat in the case of M/s. Variety Lumbers Pvt. Ltd. [2014 (302) E.L.T. 519 (Guj.)] had held that the assessee was eligible for refund of SAD paid on imported timber logs even if the logs were cut to size for subsequent sale. The appeal filed by the Department against the said decision of the Hon'ble Gujarat High Court was dismissed on merits, affirming th....
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....d non-maintainable on these grounds. The High Court also observed that this issue was not required to be decided by the High Court because High Court was dealing with a case where the refund application had been rejected because it was not filed within one year from the date of payment of Additional Duty. The Delhi High Court, on the other hand specifically dealt with such a situation and held that the limitation cannot start form the date of payment of Additional Duty since a refund application cannot be filed in the absence of a sale having subsequently taken place and the relevant documents concerning such sale were filed with the refund application. 26. In any view of the matter, the issue as to which judgment of the High Courts should be followed if conflicting views have been taken was decided by a Larger Bench (a five Member Bench) of the Tribunal in Collector of Central Excise, Chandigarh vs. Kashmir Conductors17. One issue that was addressed by the Larger Bench was what should be done when the Tribunal is faced with conflicting decisions of High Courts. The Larger Bench of the Tribunal held that if the jurisdictional High Court has taken a particular view on an in....
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....5) E.L.T. 398 (T), the Tribunal has followed the Supreme Court judgment in the case of East India Commercial Co. case and set aside the show cause notice issued against the appellants therein as it was in direct violation of the law laid down by the Allahabad High Court within whose jurisdiction both the manufacturer and the Collector of Central Excise were situated. 10.2 In a recent decision of the Tribunal in the case of Madura Coats v. CCE, Bangalore reported in 1996 (82) E.L.T. 512, it has been held that the decision of a particular High Court should certainly be followed by all authorities within the territorial jurisdiction of that High Court and that the authorities in another State are not bound to follow the views taken by a particular High Court in the absence of a decision by the jurisdictional High Court with regard to constitutionality of a provisions. The Tribunal has held that since the adjudication of vires of a provision of a statute or Notification is outside the jurisdiction of the Tribunal and the jurisdictional High Court i.e., the High Court having jurisdiction over the authority and the assessee, has not struck down the provision or Notification as u....