Introduction: The case of Acqueon Technologies Pvt. Ltd vs. Commissioner of Customs (CESTAT Chennai) centers around an issue concerning the eligibility for a refund of 4% Additional Duty of Customs. The appellant, Acqueon Technologies Pvt. Ltd, had filed refund claims under Notification No.102/2007-Cus. but faced rejection due to the absence of a required declaration on invoices. This article delves into the details and analysis of the case.
1. Background: Acqueon Technologies Pvt. Ltd, the appellant in this case, filed refund claims to seek a refund of the 4% Additional Duty of Customs as per Notification No.102/2007-Cus., with amendments. The primary contention revolved around the failure to comply with para 2(b) of the said notification, which necessitated a specific declaration on invoices. The absence of this declaration led to the rejection of the refund claims.
2. Notification No.102/2007-Cus.: Para 2(b) of Notification No.102/2007-Cus. states: “the importer, while issuing the invoice for the sale of the goods, shall specifically indicate in the invoice that in respect of the goods covered therein, no credit of the additional duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible.”
3. Appellant’s Stand: The appellant argued that, as a trader, they were not eligible to claim cenvat credit and pass it on to another party. They contended that the refund rejection was primarily due to insufficient documentation. The appellant’s legal counsel referred to the decision in the case of Chowgule & Company Pvt. Ltd. vs. CC & CE – 2018 (8) TMI 214 – CESTAT Mumbai (LB) = 2014 (306) ELT 326 (Tri.-LB) to support their case. They urged the Tribunal to allow the appeal.
4. Department’s Response: The Department, represented by Sri R. Rajaraman, supported the findings in the impugned order, arguing that the appellant failed to comply with the conditions of the notification.
5. Tribunal’s Analysis: The Tribunal closely examined the Order-in-Original and found that the appellant had submitted all the necessary documents. The sole reason for the rejection of the refund was the failure to meet the requirement of para 2(b) of the notification, which necessitated the declaration on invoices.
6. Precedent of Chowgule & Company Pvt. Ltd.: The Tribunal referred to the precedent set by the Larger Bench of the Tribunal in the case of Chowgule & Company Pvt. Ltd. (supra). The Larger Bench had emphasized that the requirement for endorsement on invoices was procedural and technical in nature. It highlighted that non-declaration of the duty element in the invoices inherently signified that no credit would be available. The Tribunal further explained that conditions of an exemption notification had to be fulfilled, but non-endorsement did not nullify the purpose of the exemption.
7. Application of Precedent: In light of the facts and the established precedent, the Tribunal held that the rejection of the refund claim was unjustified. The Tribunal determined that the appellant, being a trader, was eligible for a refund.
8. Verdict: The impugned order, which denied the refund, was set aside. The appeals were allowed with any consequential relief.
Conclusion: The case of Acqueon Technologies Pvt. Ltd vs. Commissioner of Customs (CESTAT Chennai) underscores the importance of considering the nature of conditions in exemption notifications. The Tribunal ruled that non-endorsement on invoices was a procedural matter, and the primary condition was the fulfillment of exemption criteria. Traders, despite not claiming cenvat credit, could still be eligible for customs duty refunds as long as other conditions specified in the notification were met. This case exemplifies the need for a pragmatic approach in interpreting and applying tax laws.
FULL TEXT OF THE CESTAT CHENNAI ORDER
The issue involved in both these appeals being same, they are heard together and are disposed of by this common order.
2. Brief facts are that appellant filed refund claims for refund of 4% Additional Duty of Customs in terms of Notification No.102/2007-Cus. dated 14.09.2007 as amended. After scrutiny, the original authority held that para 2(b) of the Notification No.102/2007-Cus. has not been complied with in as much as that the declaration required under the said para is not endorsed on the invoices. The refund claim were rejected for this reason. On appeal, the Commissioner (Appeals) upheld the same. Hence the appellant is now before the Tribunal.
3. The learned counsel Ms. Shrayashree appeared and argued for the appellant. It is submitted that the appellant is a trader and had imported computer parts etc. which were resold to customers. She submitted that appellant being a trader, they are not eligible to take cenvat credit and pass on the same to another. It is also submitted by the counsel that the refund has been rejected for the reason that appellant has not produced sufficient documents. Ld. Counsel relied upon the decision in the case of Chowgule & Company Pvt. Ltd. Vs CC & CE – 2018 (8) TMI 214 – CESTAT Mumbai (LB) = 2014 (306) ELT 326 (Tri.-LB). Ld. counsel prayed that the appeal may be allowed.
4. Ld. A.R Sri R. Rajaraman appeared for the Department and supported the findings in the impugned order.
5. Heard both sides. On perusal of the Order-in-Original it is seen that the appellant has furnished all the necessary documents and the only reason for rejection of refund is that para 2(b) of the notification has not been complied. The said para reads as under :
“(2) The exemption contained in this notification shall be given effect if the following conditions are fulfilled :
… … …
(b) the importer, while issuing the invoice for sale of the said goods, shall specifically indicate in the invoice that in respect of the goods covered therein, no credit of the additional duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible”
6. The very same issue was considered by the Larger Bench of the Tribunal in the case of Chowgule & Company Pvt. Ltd. (supra). The Tribunal held as under :
5.2 Rule 9 of the CENVAT Credit Rules prescribes the documents on the strength of which CENVAT credit can be taken. An invoice issued by an importer is also one of the prescribed documents. However, for taking the CENVAT credit, under sub-rule (2) of the said Rule 9, following particulars are required to be indicated, namely, details of the duty or service tax payable, description of the goods or taxable service, assessable value, Central Excise or Service Tax registration number of the person issuing the invoice, name and address of the factory or warehouse or premises of first or second stage dealers or provider of taxable service, etc. For taking the credit, the quantum of duty paid should be shown in the invoices and the same should be shown separately for each type of duties. In respect of a commercial invoice, which shows no details of the duty paid, the question of taking of any credit would not arise at all. Therefore, non-declaration of the duty in the invoice issued itself is an affirmation that no credit would be available. Therefore, non-declaration/non-specification of the duty element as to its nature and quantum in the invoice issued would itself be a satisfaction of the condition prescribed under clause (b) of para 2 of the Notification 102/2007.
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.”
7. The decision was followed by the Tribunal in the case of Nagarjuna Fertilisers and Chemicals Ltd. Vs CC (Imports) Chennai – 2017 (12) TMI 1606 – CESTAT CHENNAI.
8. We find that the appellant being a trader, the decision rendered by the larger Bench in the case of Chowgule & Company Pvt. Ltd. (supra) will squarely apply. After appreciating the facts, evidence and following the above decision, we are of the considered opinion that the rejection of refund claim is unjustified. We hold that the appellant is eligible for refund.
9. In the result, the impugned order rejecting the refund is set aside. The appeals are allowed with consequential relief, if any.
(dictated and pronounced in court)