TaxTMI 
TaxTMI 
2025 (1) TMI 749
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.... SAD. Thereafter, they filed for refund in respect of said payment of SAD in accordance with Notification No. 102/2007-Cus, dated 14.09.2007. They have also informed that from the imported raw cashew nuts, they manufactured cashew kernel and sold to various vendors, on which applicable VAT/CST was also paid. However, on going through the documents submitted along with the refund claims, it was observed by the Department that the description of the imported goods and sold goods were not tallying and therefore relying on the CBEC Circular No. 15/2010 dated 29.06.2010, a show cause notice was issued proposing denial of refund and subsequently vide Order-in-Original dated 24.07.2017 the refund was rejected. 3. It is an admitted fact that the appellants were engaged in two activities namely import of raw cashew nuts and selling it as such and also import of raw cashew nut and converting it into cashew kernel and selling manufactured cashew kernel. While, in the case of first category, the refund of SAD was fully allowed by Department, whereas, in the case of second category, it was felt that as raw cashew nut and cashew kernel are classifiable under two different headings namely 080131....
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.... nature of processes undertaken for converting raw cashew nut into cashew kernel. The conversion process involves steaming of nut shell cashew under pressure and thereafter subjected to shelling, drying and pealing in order to make cashew edible. He has also relied on the judgment in the case of Gayatri Timbers Pvt Ltd., where vide para 24, the Hon'ble High Court had observed that "as a matter of fact Circular No. 15/2010 dated 29.06.2010 has virtually amended the exemption notification. It was also stated that by a Circular / instruction, an exemption notification issued in exercise of Statutory Authority, cannot be amended". Hence, the reliance placed upon the Circular is misplaced and not tenable. Further, he submits that the Department is providing clarification beyond its jurisdiction, and therefore in view of the judgment of Hon'ble High Court of Telangana, the refund is admissible even when there is a change in CTH and the imported goods are not sold as such and that the product does not lose its essential character. 6. Learned Advocate has also relied, interalia, on the order passed by Coordinate Bench in their own case [2018 TMI 1099 (Cestat-Chennai)] wherein the Bench he....
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.... of applicable VAT/CST. It is also an admitted position that wherever they have imported cashew nut and sold as such, they have been allowed the refund of SAD. The main ground taken by the Department is that in view of Notification No. 102/2007-Cus read with Circular No. 15/2010 dated 29.06.2010, since the imported goods have not been sold as such and were actually sold only after carrying out certain process and therefore conditions of the notification is not met. Reference has also made to Circular No. 34/2010 dated 15.09.2010 which made it clear that condition regarding payment of state VAT on imported inputs cannot be fulfilled in a situation where inputs are consumed and not sold as such. 11. Before proceeding further, we need to peruse the Notification No. 102/2007-Cus, which is reproduced below for the ease of reference: i) Notification No. 102/2007-Customs Dated 14.09.2007: Special CVD - Exemption to all goods when imported for subsequent sale. In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the goo....
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....ment of VAT in respect of said goods. Therefore, if the wordings used in notification are read conjointly, it would be obvious that the notification is applicable only when the imported goods itself is sold and at the time of said sale appropriate sales tax are also paid. Admittedly, the word "as such" has not been mentioned in the notification, but strict interpretation of this notification having regard to the wordings used would indicate that the exemption is available only when the goods are sold as such and not after certain processing. The circular referred in show cause notice or impugned order has only clarified this position, which is otherwise apparent on plain reading of notification itself. This was in the backdrop of some fraudulent attempt to claim refund by manipulating the facts of the imported goods being sold as such and the modus operandi was brought to the notice of the field formations highlighting that there is distinguished difference in timber logs and "sole/ cut logs". Similarly, Circular No. 34/2010 also clarifies certain position with regard to Notification No. 102/2007, which are also otherwise apparent on plain reading. Therefore, Department has not sol....
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....ction between the exporter and foreign buyer are inextricably connected with each other, the same goods theory has no application. This is clearly distinguished as the facts are quite different in the present appeal. In fact, in the same judgment, they have also referred to the judgment in the case of Vijaya Laxmi Cashew Company that in the said case, based on the facts brought to the notice of the Court it came to the conclusion that the kernels were not same as a raw cashews purchased by dealers and what was exported were edible kernels and were purchased for the purpose of raw cashew needs. 14. On the other hand, we find that the ratio of Proflex System Vs CC (supra), which considered various judgments including Agarwal Timbers Pvt Ltd., Vijirom Chem Pvt Ltd., etc., are applicable. Hence, the Hon'ble High Court after going through the facts of the case, where the identical notification i.e. 102/2007-Cus was involved, held at para 6.1 that for claiming refund under said notification, the importer has to specify that Value Added Tax/ Service Tax as the case may be has been paid on the goods imported and only those goods imported are sold and the VAT is paid on such imported goods....