Case Law Details
Commissioner of Customs, Goa Vs Goa Golf Club Private Limited (CESTAT Mumbai)
In appeal, the Ld. Commissioner (appeals) allowed the appeal and sanctioned refund. Hence, appeal by Revenue. Hon’ble CESTAT, Mumbai dismissed the appeal filed by the Department.
The appellant purchased a vessel. It was manufactured in the custom bonded warehouse. At the time of debonding, bill of entry was filed. Special additional duty (SAD) was paid on the vessel. VAT was also paid at the time of purchase of the vessel. Accordingly, it filed claim for refund of SAD paid on the vessel in terms of Notification No.102/2007-Cus. The refund claim was rejected. In appeal, the Ld. Commissioner (appeals) allowed the appeal and sanctioned refund. Hence, appeal by Revenue. Hon’ble CESTAT, Mumbai dismissed the appeal filed by the Department.
It held:
(i) Notification No.102/2007-Cus allows refund of SAD if local sales tax is paid on the said commodity as SAD is levied on imported goods in lieu of local sales tax;
(ii) the condition that the claim can be filed by any person who has borne the incidence of the tax; the respondent being the purchaser of the vessel is entitled to claim refund;
(iii) as per section 2(26) “importer” includes owner of the goods. Hence, the respondent can claim refund of SAD;
(iv) the test of unjust enrichment is satisfied based on certificate issued by chartered accountant;
(v) follows earlier decision in Bhavna Earthmovers case.
The matter was argued by Ld. Counsel Bharat Raichandani
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
This appeal has been filed by the Revenue (herein after referred to, for short, as “the appellant”) assailing the Order-in-Appeal No. GOA/CUS/GSK/ 54/2013 dated 31.07.2013 (hereinafter referred to, for short, as “the impugned order”) passed by the Commissioner (Appeals), Customs, Central Excise & Service Tax, Goa.
2.1 The brief facts of the case are that the respondent assessee M/s. Goa Golf Club Private Limited, Goa (GGCL), is engaged in providing taxable services and have filed a refund claim of Rs.60,44,828/- in respect of refund of Special Additional Duty of Customs (SAD) in terms of Notification No.102/2007-Customs dated 14.09.2007 by submitting the refund application before the jurisdictional customs authorities.
2.2 Earlier, the respondent assessee had purchased a vessel named M.V. Jai Sofia, manufactured in customs bonded warehouse of M/s Mandevi Dry Docks, Goa, who are duly licensed by customs authorities; while de-bonding of the said vessel for home consumption, necessary Ex-bond Bill of Entry No.14/ 29.07.2007 was filed by the vessel manufacturer and appropriate duties of customs as applicable was paid by them. The basic customs duty on such vessel was exempt vide Sl. No. 352 of Notification No. 21/2002-Customs dated 01.03.2002 and the applicable SAD at 4% ad valorem was paid on the said vessel. The respondent assessee had also paid Value Added Tax (VAT) amounting to Rs. 78,58,277/- on the said vessel to the Government of Goa, Department of Commercial Tax vide VAT Returns Summary for the period 01.07.2011 to 30.09.2011 after the delivery of the said vessel to them. In terms of Notification No. 102/2007-Customs dated 14.09.2007, if SAD levied under Section 3(5) of the Customs Tariff Act, 1975 is paid on an article, then the said duty is refundable, if Value Added Tax (VAT) is also paid on the said article. Since the respondent assessee had borne the SAD at the time of import and also paid VAT subsequently, on the same article and borne the duty incidence on both these payments, they had filed the refund claim in terms of the notification No.102/2007-Customs. However, they were served with a show cause notice dated 03.09.2012 calling upon them to show cause as to why the said refund claim should not be rejected. Upon considering their written reply letter dated 09.10.2012 and after giving a personal hearing on 02.01.2013, the Original authority had rejected the refund of 4% Special Additional Duty refund claim on the ground that conditions of paragraph 2(b) and 2(c) of Notification No. 102/2007-Customs dated 14.09.2007 have not been fulfilled by the respondent assessee vide Order-in-Original dated 20.03.2013. On feeling aggrieved against this order, they filed an appeal before the Commissioner (Appeals), Customs, Central Excise & Service Tax, Goa who vide Order-in-Appeal dated 31.07.2013 had allowed the appeal of the respondent assessee and directed the lower authority to process the refund claim as per law. In review of the said order dated 31.07.2013, the Revenue feeling aggrieved had filed this appeal before the Tribunal.
3.1 Learned Advocate appearing for the respondent assessee submitted that the impugned order passed by the Commissioner (Appeals) is correct both on facts as well as on law. He placed reliance on the Final Order of the Tribunal passed in the case of Commissioner of Central Excise, Goa Vs. Bhavana Earthmovers – 2019 (369) E.L.T. 948 (Tri.- Mumbai), where on identical facts and circumstances, the Tribunal on the basis of Hon’ble Supreme Court’s judgement in Mafatlal Industries had held that the respondent is eligible for refund of SAD, by dismissing the appeal filed by Revenue. He reiterated that the Commissioner (Appeals) had also decided their case on the basis of his decision in the case of Bhavana Earthmovers and on the basis of judgement delivered by the Hon’ble High Court of Bombay in Eco Vally Farms & Foods Limited Vs. Commissioner of Central Excise, Pune-III – 2013 (290) E.L.T. 49 (Bom.) holing that the judicial discipline is to be observed by following the decision given by higher appellate authority. Thus, he pleaded that the appeal filed by Revenue has no merits and the same is liable to be dismissed.
3.2 Further, learned Counsel also submitted the following case laws in support of their stand:
(i) Larsen & Toubro Limited vs. State of Karnataka – 2014 (34) S.T.R. 481 (S.C)
(ii) Novo Nordisk India Pvt. Ltd. vs. Commissioner of Customs (ACC & Import), Mumbai – 2013 (292) E.L.T. 252 (Tri. – Mumbai)
(iii) Chowgule & Company Ltd. vs. Commissioner of Central Excise – 2014 (306) E.L.T. 326 (Tri. – LB)
(iv) Total Environment Woodwork Pvt. Ltd. vs. C.C.E. – 2017 (357) E.L.T. 1215 (Tri. – Bang.)
(v) GL & V India Pvt. Ltd. vs. C.C.E. – 2013 (30) S.T.R. 550 (Tri. – Mumbai)
(vi) Godrej & Boyce Mfg. Co. Ltd. vs. C.C. – 2001 (134) E.L.T. 429 (Tri. – Mum.)
(vii) Bharat Heavy Electricals Ltd. vs. C.C.E. – 2010 (253) E.L.T. 339 (Tri. – Del.)
4. Learned authorised Representative (AR) appearing for the department reiterated the submissions made in the appeal of the Revenue, and submitted that the respondent assessee have not fulfilled the conditions of the notification No.102/2007-Customs dated 14.09.2007. The learned authorised representative, therefore stated that the appeal filed by the department may be allowed.
5. Heard both sides and perused the records of the case.
6. The issue for consideration before the Tribunal is to decide whether the respondent assessee’s claim is eligible for exemption under Notification No.102/2007-Customs dated 14.09.2007 or not; and as a result, whether the exemption can be given effect to by way of refund of Special Additional Duty paid by them and the impugned order allowing such refund claim of the respondent assessee is sustainable or not.
7. In order to appreciate the above issues, it would be appropriate to refer to the relevant Notification No.102/2007-Customs dated 14.09.2007 as amended upto the relevant period of dispute, which is extracted and given below:
“Notification No. 102/2007-Customs., dated 14-9-2007
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, including the said additional duty of customs leviable thereon, as applicable, at the time of importation of the goods;
(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;
(c) the importer shall file a claim for refund of the said additional duty of customs paid on the imported goods with the jurisdictional customs officer before the expiry of one year from the date of payment of the said additional duty of customs;
(d) the importer shall pay on sale of the said goods, appropriate sales tax or value added tax, as the case may be;
(e) the importer shall, inter alia, provide copies of the following documents alongwith the refund claim :
(i) 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.”
8.1 From careful perusal of the aforesaid notification, it transpires that the aforesaid Notification No.102/2007-Customs provides for exemption from the whole of additional duty of customs leviable under Section 3(5) of the Customs Tariff Act, 1975. It also transpires that such exemption has been provided, since the said additional duty of customs is specially paid in lieu of sales tax or VAT on imported goods at the first instance of its import, and subsequently when such imported goods are sold as such, if the said goods are paid with applicable sales tax or VAT again, then the first paid special additional duty of customs is exempted by way of refund of such tax, subject to prescribed five conditions as specified under paragraph 2 of the notification.
8.2 In the impugned order dated 31.07.2013, it has been held by the learned Commissioner (Appeals) as follows:
“I am bound my decision given in Order-in-Appeal No. GOA/CUS/GSK/149/ 2012 dated 16.10.2012, which has not been Stayed by the Hon’ble CESTAT, vide its Order No. 5/486/3/CSTB/C-1 dated 2.03.2013.
In view of the foregoing, the Appeal is allowed by setting aside the impugned order and directing the Lower Authority to process the refund claim as per law.”
8.3 In the present case, the fact that the impugned goods viz. vessel, had been paid with special additional duty of customs at the time of its import/ex-bond clearance and also paid with applicable VAT at the time of its sale to the respondent assessee is not in dispute. The ex-bond Bill of Entry No. 14 dated 29.07.2011, Tax invoice MDD/2011-12/014 dated 29.07.2011, VAT returns filed with the Government of Goa, Commercial Tax Department for the period 01.07.2011 to 30.09.2011 are the documents that supports the above fact and these have been submitted by the respondent assessee to the department and the same have been mentioned in the impugned order. Thus, we find that the three conditions at (a), (d) and (e) at paragraph 2 of the Notification No.102/2007-Customs have been fulfilled by the respondent assessee.
8.4 As regards the condition (c), the objection raised in the SCN is that the respondent assessee is not the importer, and the learned Commissioner (Appeals) in the impugned order has considered this issue and held that inasmuch as the respondent assessee who claims the refund of duty is eligible for claiming the refund, as a person who had borne the incidence of duty in terms of Section 27 of the Customs Act, 1962, and on the basis of the decision taken by him in another Order-in-Appeal No. GOA/ CUS/GSK/149/2012 dated 16.10.2012 on similar set of facts in the case of Bhavana Earthmovers (supra), refund is eligible to the respondent assessee. Further, in respect of condition (b), the impugned order records the fact that Chartered Accountant’s certificate has been submitted by the respondent assessee which is attesting to the fact that the import duty was borne by the respondent assessee (purchaser of the vessel) and confirming that the liability of this amount has not been passed on to any other person as the vessel has been used by the respondent assessee for its business purpose. Similarly, the impugned order also records the fact that the certificate of Chartered Accountant of M/s Mandovi Drydocks dated 16.07.2012, the manufacturer-importer, which was also enclosed along with the refund application, also states that the customs duty and the VAT in respect of the vessel M.V. Jai Sofia has been paid by M/s Mandovi Drydocks, however the same has been borne by the respondent assessee. Thus, the impugned order conclusively established that the respondent assessee has not availed any benefit of Cenvat credit in respect of purchase of the vessel M.V. Jai Sofia. Thus, the objection raised in the SCN in respect of condition (b) has also been fulfilled as explained in the impugned order, as above.
8.5. Further, we find that the definition of the term ‘importer’ under Section 2(26) of the Customs Act, 1962 includes any owner. As the respondent assessee is the owner of the imported goods/vessel in the present case, they are covered by the term ‘importer’. As the rest of the two conditions have also been fulfilled in the present case, we are of the considered view that the respondent assessee is accordingly eligible to claim refund of SAD in terms of Notification No.102/2007-Customs.
9. We further find that in respect of the Order-in-Appeal No. GOA/ CUS/GSK/149/2012 dated 16.10.2012 having similar set of facts in the case of Bhavana Earthmovers (supra), the Tribunal has held that there is no infirmity in the said order of the Commissioner (Appeals) and dismissed the appeal filed by the Revenue. The relevant paragraphs of the said order is extracted and given below:
“This appeal filed by Revenue is directed against the Order-in-Appeal No. GOA.CUS/GSK/149/2012, dated 16-10-2012 of Commissioner of Customs & Central Excise (Appeals), Goa. By the said order, Commissioner (Appeals) allowed the appeal filed by the respondent by setting aside the order of adjudicating authority and holding as follows :
“In view of the above the impugned order is not correct in law and hence set aside. Lower Authority directed to process the claim, if necessary after due verification with the jurisdictional Central Excise Office, whenever felt necessary.”
xxx xxx xxx xxx
3.1 In their appeal, Revenue has challenged the order of Commissioner (Appeals) stating that –
i. As per Para 2(c) of the Notification No. 102/2007-Cus., dated 14-9-2007 (as amended) the refund claim could have been filed only by the importer. Since the claimant in present case is not the importer, the refund claim could not have been allowed in his favour.
ii. As per Para 2(b) of the notification it was mandatory that invoice issued for the sale of goods by importer to indicate that “no credit of additional duty of Customs levied under sub-section (5) of Section 3 of the Customs Tariff Act, 1975 shall be admissible”. Since the invoice dated 15-3-2011, was issued by M/s. Vijai Marine Services without making such an endorsement, this condition of notification has not been complied with and refund application should have been rejected.
xxx xxx xxx xxx
5.5 Thus from the order of Commissioner (Appeals) it is evident that he has not absolutely allowed the refund application made but has allowed it subject to the condition of verification of fact of non-availment of the Cenvat credit from the jurisdictional Central Excise Officers. In our view by building this safeguard Commissioner (Appeals) has ensured substantial compliance with the condition specified at 2(b) of the Notification No. 102/2007-Cus.
5.6 Second objection raised by the Revenue in their appeal, is with regards to the respondent filing the refund claim, they being not importer. Revenue has relied on Condition 2(c) of the said notification for raising this objection. The word importer used in the Notification No. 102/2007-Cus. needs to be interpreted in terms of the said notification, and by reading the notification as whole. In terms of –
-
- 2(a) importer of the goods shall pay all duties;
- 2(c) importer shall file a claim for refund; and
- 2(d) importer shall pay on sale of the said goods.
In the present case it is not disputed that the burden of the Customs duties as applicable and paid and that of the sales tax/VAT as applicable and paid has been borne by the applicant (respondents). Since they have borne the burden of both the Customs Duty and Sales Tax/VAT they have filed this refund claim.
5.8 In view of above we do not find any infirmity in the orders of Commissioner (Appeals).
6.1 Appeal filed by the Revenue is dismissed and the cross-objections also disposed of accordingly.”
10. In view of the above discussion on the merits of the case in paragraphs 8.1 to 8.5 and on the basis of the Final order of the Tribunal dated 22.01.2019 as discussed in paragraph 9, we do not find any merits in the appeal filed by Revenue.
11. In the result, the appeal filed by Revenue is dismissed, with consequential relief to the respondent assessee in respect of the refund claim admissible as per law.
(Operative portion of the Order pronounced in open court)
Author Bio
