TaxTMI 
TaxTMI 
2026 (10) TMI 142
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....ional Duty (SAD) or demanded erroneously refunded amount of SAD on the ground that the appellants had not satisfied one of the major conditions of the Notification No. 102/2007-Cus. dated 14.09.2007. Aggrieved by these orders, the appellants are in appeal before this Bench. 3. The Learned Counsel appearing for all the 3 appellants (26 appeals) submits that the issue is no longer res integra in as much as the Hon'ble Tribunal Chennai vide Final Order No. 40860 - 40861 / 2018 dated 16.03.2018 held in favour of the appellant in an identical issue and the Commissioner (Appeals) should not to have ignored the order of the Tribunal in deciding the refund claims. It is also submitted that the Commissioner (Appeals) relied on the definition of manufacture as provided in the Foreign Trade Policy which has no relevance as the same is for the purpose of export promotion schemes and not for the purpose of exemption under Customs Act or Customs Tariff Act. 3.1 It is also submitted that the essential condition to satisfy the term 'manufacture' is that a new product having a distinctive name, character or use has to emerge; in the present case, the name is the same, character of the goods r....
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....is eligible for the benefit of SAD refund under the Notification No.102/2007-Cus. dated 14.09.2007. It is also submitted that in the case of Commissioner of Customs vs. Variety Lumbers Pvt. Ltd.: 2014 (302) ELT 519 (Guj.), the Hon'ble High Court held in favour of the appellant which was upheld by the Hon'ble Supreme Court as reported at 2018 (360) ELT 790 (SC). Also relied on the following decisions: * Olam Agro India Pvt. Ltd. Vs. CC, Tuticorin: 2019 (370) ELT 902 * Milak Brothers vs. UOI: 1991 (51) ELT 204 (S.C.) * CC vs. Gayathri Timers: 2018 (360) ELT 267 (A.P.) * Malhotra Imports vs. CC, Chennai-IV: 2018 (359) ELT 535 (Tri. Chennai) * Dish TV India vs. CC, Tughlakabad: 2017 (347) ELT 156 (Tri. Del.) * Gazal Overseas vs. CC, New Delhi: 2016 (332) ELT 767 (Tri. Del.) * Suvee Impex vs. CC, Bangalore: 2016 (334) ELT 241 (Tri. Bang.) * CC, Noida vs. Ganpati Enterprises: 2024 (389) ELT 650 (Tri.All.) * CC vs. Posco India: 2014 (299) ELT 263 (Guj.) 4. The learned Authorised Representative (AR) on behalf of the Revenue on the other hand reiterating the specific findings of the Commissioner (Appeals) su....
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....act that the appellants had discharged Central Excise duty itself proves that the goods were manufactured and liable to Central Excise duty as per the Central Excise provisions. The only argument of the appellant is that the Notification No. 102/2007-Cus. dated 14.09.2007 states that the imported goods are subsequently sold on payment of VAT was sufficient enough for sanctioning the refund and the legal fiction in the Chapter Note of the Central Excise Tariff cannot be invoked to deny the benefit of the Notification since the Notification does not mention that the goods have to be cleared 'as such' and they relied on the decision of the Hon'ble High Court in the case of CC vs. Variety Lumbers (supra) and similar other cases. The above decision of the Hon'ble High Court is distinguishable on facts since the refund therein was allowed on the timber logs on the ground that the imported round logs when subjected to sawing in different sizes and length, does not prove that the goods have undergone manufacture. However, the present set of facts are entirely different wherein it is clearly proved that the imported goods were cleared on payment of Central Excise duty since the process invo....
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....(Emphasis supplied) 5.2 The above Notification states the importer of the said goods while issuing the invoice for sale of the said goods will pay appropriate sales tax on the said goods and at Para 3 it says documents evidencing payment of appropriate sales tax on sale of such imported goods. The term said goods and sale of such imported goods very clearly imply that what is to be sold is the goods that were imported without any further process of manufacture. Admittedly in this case since the goods have been taken to the factory and a further process such as sterilisation, repacking and relabelling have been undertaken, the question of claiming that the goods were sold 'as such' because the identity of the goods did not change is totally misplaced. Also, to claim that Central Excise Duty as per Third Schedule to the Central Excise Act, 1944 is a legal fiction as the same is only 'deemed manufacture' and the conversion of the bulk packages to retail packages will not change the identity, nature and classification of the goods is incorrect in view of the decision of the Hon'ble Supreme Court in the case of Collector of Central Excise, Bombay Versus S.D. Fine Chemicals Pvt. Ltd.:....
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.... "30. The legal position has been clearly crystallized in S.D. Fine Chemicals Pvt. Ltd. and other judgments of this court that certain processes which may not otherwise amount to manufacture have been deemed to be manufacture by the Parliament under section 2(f)(ii)........ 31. In deciding the cases of this nature, the courts have to make serious endeavour to ascertain spirits and intention of the Parliament in enacting these provisions and once the legislative intention is properly gathered, then the bounden duty and obligation of the courts is to decide the cases in consonance with the legislative intention of the Parliament". 5.4 Further the Hon'ble Supreme Court in the case of O.K. Play (India) Ltd. Versus Commissioner of C.EX., New Delhi-II 2005 (180) E.L.T. 291 (S.C.) dated 04-2-2005 observed as follows: "11. Section 2(f) contains two clauses and instead of setting out the activities in respect of different tariff items, Clause (ii) simply states that any process, which is specified in section/chapter notes of the Schedule to the Tariff Act shall amount to "manufacture". Under Clause (ii), the Legislature intended to levy excise duty on activities....
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....e Description of the excisable goods 1 2 3 1 1302 19 20, 1302 19 30 Cashew shell liquid (CNSL) 51 4015 Surgical rubber gloves or medical examination rubber gloves Notification New Delhi, the 1st March, 2011 No. 2/2011-Central Excise G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the excisable goods of the description specified in column (3) of the Table below and falling under Chapter, heading, sub-heading or tariff item of the First Schedule to the Central Excise Tariff Act, 1985 ( 5 of 1986), specified in corresponding entry in column (2) of the said Table, from so much of the duty of excise leviable thereon under the said Central Excise Act, as is in excess of the amount calculated at the rate of 5% ad valorem: Table Sl. No. Chapter or heading of the First Schedule Description of the excisable goods 1 2 3 1 1302 19 20, 1302 19 30 Cashew shell liquid (CNSL) 51 4015 Surgical rubber gloves or med....
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....he Notification No. 102/2007-Cus., dated 14-9-2007, in spite of the clarification under C.B.E. & C. Circular No. 34/2010- Customs, dated 15-9-2010?" xxx 44. The fundamental legal principle, which we need to note is that an exemption notification has to be interpreted stricto sensu. No external aids can be brought into interpret an exemption notification. If the assessees, who claim benefit of exemption notification, fail to fulfil any one of the conditions contained therein, the benefit cannot be extended. Courts have to read the exemption notification as such without substituting the words or phrases. Bearing in mind this legal principle, if we examine the order passed by the Tribunal, we find that the Tribunal was of the view that the Notification No. 102/2007 was in supersession of the earlier notification and that the words "as such" have been omitted. xxx 50. In the result, - (i) C.M.A. (MD) No. 687 of 2019 is allowed and for the reasons assigned by us, the order passed by the Tribunal and the order-in-original No. 1/2016, dated 19-4-2016, is set aside and the matter is remanded to the Commissioner of Customs, Tuticorin, to consider th....
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....al Duty under Notification No. 102/2007Cus., dated 14-9-2007 or not. From the material on record, it appears that what is imported is coil sheets and what is sold subsequently by the appellant is "Proflex Roof". That thereafter, "Proflex Roof" is installed on the building as per the requirement of their clients and on the "Proflex Roof", the VAT is paid. At this stage, it is required to be noted that even in the invoice the rate of laying of "Proflex Roof" is also charged on per square meter including the value of the material. There is no separate invoice/bill issued for coil sheets. Therefore, it cannot be said that what is sold by the appellant to his client is same goods which is imported i.e. coil sheets. Under the circumstances and one of the condition of Notification No. 102/2007-Cus., dated 14-9-2007 has not been complied with i.e. appellant has not paid VAT on the goods imported i.e. coil sheets and what is sold subsequently is "Proflex Roof" and what is charged by the appellant is for "Proflex Roof on which the VAT has been paid and as the VAT is not paid on the coil sheets, the appellant is rightly denied the refund of Special Additional Duty claimed under the Notificati....
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....9.2010 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 goods falling within the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India for subsequent sale, from the whole of the additional duty of customs leviable thereon under sub-section (5) of section 3 of the said Customs Tariff Act (hereinafter referred to as the said additional duty). 2. The exemption contained in this notification shall be given effect if the following conditions are fulfilled: (a) the importer of the said goods shall pay all duties, inc....
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....hat 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 solely relied on circulars per se but has analysed the provisions contained in the relevant notification under which refund has been claimed by the appellant. 12. Coming to the judgments relied upon by the Learned Advocate, We find that in the order in their own case by the CESTAT Co-ordinate Bench, Chennai, the Tribunal has mainly relied on M/s Kanam Latex Industries (P) Ltd., Final Order No. 40860-40861/2018 dated 16.03.2018 and Anoth....
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....sion 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. Reliance is also placed on Seven Hills Solvents Pvt Ltd., Vs CCT (supra) by CESTAT, Hyderabad. 15. Learned Advocate has also tried to raise certain additional issues regarding liberal interpretation and that State cannot be enriched at the cost of manufacturers by way of taxation etc. We do not find these arguments tenable, in view of the fact in the scheme of things, as is also apparent from the Hon'ble Fi....