Case Law Details
LG Electronics India Pvt. Ltd. Vs Commissioner of Customs(Exports) (CESTAT Chennai)
In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Chennai has recently delivered a crucial judgment in the case of LG Electronics India Pvt. Ltd. versus the Commissioner of Customs (Exports). The judgment, dated [Date], pertains to the eligibility of the appellant for the refund claim under Notification No.102/2007-Cus. The core issue revolved around the necessity of endorsing a specific clause on the invoice, and the CESTAT Chennai, citing a previous landmark decision, allowed the benefit of exemption even in the absence of such an endorsement.
Background:
LG Electronics India Pvt. Ltd. filed a refund claim under Notification No.102/2007-Cus. dated 14.09.2007, seeking a refund of Special Additional Duty (SAD) paid during the import of goods. The claim was rejected by the original authority on the grounds that the invoice did not contain the necessary endorsement stipulated in para 2(b) of the said notification. The appellant, dissatisfied with this decision, appealed the matter, but the Commissioner (Appeals) upheld the rejection. Subsequently, the appellant approached CESTAT Chennai to challenge these decisions.
Legal Analysis:
The appellant, identified as a trader, contended that, being a trader, they were unable to pass on the credit to any person. Therefore, they argued that there was no requirement to fulfill the condition laid out in para 2(b) of the notification. Citing a precedent – the case of Chowgule & Company Pvt. Ltd. Vs CC & CCE (2014) – the appellant asserted that the specific condition regarding the endorsement on the invoice was procedural and did not affect the substantive rights under the exemption notification.
Key Findings:
- Trader’s Inability to Pass Credit: The appellant, being a trader, emphasized their inability to pass on the credit to any person, thereby arguing against the necessity of fulfilling the condition as per the decision in Chowgule & Company Pvt. Ltd. Vs CC & CCE (2014).
- Procedural Nature of Endorsement: CESTAT Chennai, referring to the decision of the Tribunal’s Larger Bench in the case of Chowgule & Company Pvt. Ltd., acknowledged that the condition related to the endorsement on the invoice was procedural in nature. It held that the purpose and object of such an endorsement could be achieved when the duty element itself was not specified in the invoice.
- Liberal Construction of Exemption Clause: The Tribunal, applying the ratio of previous decisions, emphasized the need for a liberal construction of exemption clauses. It stated that such clauses should be interpreted in a way that best harmonizes with the object of the statute, and which effectuates the intention of the legislature.
Judicial Decision:
In conclusion, the CESTAT Chennai ruled that the rejection of the refund claim was not justified. The impugned order was set aside, and the appeals were allowed with consequential relief, if any.
This landmark decision by CESTAT Chennai reinforces the principle that procedural conditions in exemption notifications should not unduly hinder substantive rights. The judgment provides clarity on the interpretation of such conditions, ensuring a fair and just application of the law in cases of refund claims under customs notifications.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Brief facts are that the appellant filed refund claim under Notification No.102/2007-Cus. dt. 14.09.2007 for refund of SAD paid by them at the time of import of goods. The claim was rejected by the original authority for the reason that the invoice did not contain the endorsement “no credit of additional duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible”. On appeal, the Commissioner (Appeals) upheld the same. Hence this appeal.
2. The learned Counsel Sri Rohan Muralidharan appeared and argued for the appellant. It is submitted by the learned counsel that the appellant is a trader and had furnished all documents along with the refund claims. The original authority has rejected the claim only on the ground that para-2(b) of the notification is not complied. The appellant being a trader it is not possible to pass on the credit to any person. So there is no requirement to fulfil the condition as per the decision in the case of Chowgule & Company Pvt. Ltd. Vs CC & CCE – 2014 (306) ELT 326 (Tri.-LB). It is prayed that the appeal may be allowed.
3. The Ld. A.R Sri M. Ambe appeared for the Department and supported the findings in the impugned order.
4. Heard both sides.
5. The issue is whether the appellant is eligible for the refund even though there is no endorsement in the invoices as per para 2(b) of the Notification No.102/2007-Cus. dt. 14.09.2007. The issue is settled by the decision of the Tribunal’s Larger Bench in the case of Chowgule & Company Pvt. Ltd. Vs CC & CCE (supra). Relevant para of the order reads as under :
5.3. In the Mangalore Chemicals and Fertilizers Ltd.’s case (supra), the Hon’ble Apex Court observed that a distinction, between the provisions of a statute which are of a substantive character and were built-in with certain specific objectives of policy on the one hand and those which are merely procedural and technical in nature on the other, must be clearly drawn. It was further held in the said decision that while interpreting an exemption clause, liberal construction should be imparted to the language thereof if the subject falls within the scope of the exemption. It was also held that, the need to resort to any interpretative process would arise only where the meaning is not manifest on the plain words of the statute. As held by the Hon’ble Apex Court in the New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar [AIR 1963 S.C. 1207] – “it is a recognized rule of interpretation of statutes that expressions used therein should ordinarily be understood in a sense in which they best harmonize with the object of the statute, and which effectuate the object of the Legislature”.
Applying the ratio of these decisions to the facts of the case before us, it can be seen that the condition relating to endorsement on the invoice was merely a procedural one and the purpose and object of such an endorsement could be achieved when the duty element itself was not specified in the invoice. Since the object and purpose of the condition is achieved by non-specification of the duty element, the mere non-making of the endorsement could not have undermined the purpose of the exemption. Thus we concur with the view taken by this Tribunal in the cases of Equinox Solution Ltd. and Nova Nordisk India Pvt. Ltd. (supra).
5.4 In view of the factual and legal analysis as above, we answer the reference made to us as follows. A trader-importer, who paid SAD on the imported .good and who discharged VAT/ST liability on subsequent sale, and who issued commercial invoices without indicating any details of the duty paid, would be entitled to the benefit of exemption under Notification 102/2007-Cus., notwithstanding the fact that he made no endorsement that “credit of duty is not admissible” on the commercial invoices, subject to the satisfaction of the other conditions stipulated therein. The above decision is rendered only in the facts of the case before us and shall not be interpreted to mean that conditions of an exemption notification are not required to be fulfilled for availing the exemption.
6. The reference as answered above is returned to the referring Bench for further action as necessary.”
6. Following the cited decision, we are of the opinion that the rejection of refund claim is not justified. Impugned order is set aside. Appeals are allowed with consequential relief, if any.
(Dictated and pronounced in court)
