Cus - Appellant has not paid VAT on imported coil sheets - what is sold is 'Proflex Roof' - Refund of SAD rightly denied: HC
By TIOL News Service
AHMEDABAD, MAR 03, 2017: ADJUDICATING authority has rejected four refund claims of SAD filed by the appellants under Notification No.102/2007-Cus , dt.14.09.2007 on the ground that assessee has not paid VAT on the imported goods i.e. coils and what is sold subsequently by the assessee and on which VAT is paid is altogether different goods i.e. roof and, therefore, the assessee is not entitled to refund of SAD, as claimed, as the conditions of the notification are not fulfilled/ satisfied.
The Commissioner(A) upheld this order and, therefore, the appellant filed appeals before the CESTAT.
The CESTAT too rejected the appeals observing thus -
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"Under Clause 2(d) of the notification, importer is required to pay sales appropriate sales tax or value added tax on subsequent sales of the imported goods - From the working arrangement between applicant and customer, it is seen that quantity of imported goods used or sold is not known till the completion of the contracted work (Roof) - In the final invoices also, it is not separately shown as to how much quantity of imported goods have been sold to the clients; unused quantity of material/wastage also remains the property of the appellant - The rate of laying of 'Proflex Roof' is also charged on per square meter including the value of the materials, and final retail invoice is issued after completion of work when the imported goods are not at all existing in the form they were imported - When the deemed sale of the material takes place, the imported goods do not exist as such but what exists is the 'Proflex Roof' - It is also not made clear whether CST paid in the final invoices is only with respect to imported goods or also represent other materials/consumables as per purchase orders."
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The CESTAT also noted that the facts involved are different from those discussed in the case of Posco India Delhi Steel Processing Centre - 2012-TIOL-1769-CESTAT-AHM which judgment the appellant sought to rely upon. Inasmuch as, in the cited case, the process undertaken by the importer did not amount to manufacture and imported goods continued to retain their distinct and original character as well as identity.
We reported this case as = 2014-TIOL-1315-CESTAT-AHM.
Aggrieved by this order, the appellant has filed an appeal in the Gujarat High Court.
After considering the submissions made by both sides and extracting the impugned notification, the High Court observed -
+ As per the aforesaid Notification, the importer has to pay first the Special Additional Duty on the goods so imported and thereafter if conditions mentioned in the said Notification are fulfilled, the importer is entitled to refund of Special Additional Duty.
+ One of the conditions is that the importer shall pay on the sale of said goods (imported goods) appropriate sales tax or value added tax, as the case may be. Thus, for claiming refund under the said Notification, the importer has to satisfy that the Value Added Tax / Sales 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.
+ In the present case, what is imported by the appellant is coil sheets. The Special Additional Duty is paid on such imported goods namely coil sheets. Thereafter, what is manufactured and sold by the appellant is "Proflex Roof" and on such "Proflex Roof" VAT is paid. Therefore, it cannot be said the assessee has paid the VAT on the goods imported, on which, Special Additional Duty has been paid. Under the circumstances, one of the conditions mentioned in the Notification No. 102/2007-Cus dated 14.09.2007 has not been complied with.
+ 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 conditions of Notification No. 102/2007-Cus dated 14.09.2007 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 Notification No. 102/2007-Cus dated 14.09.2007.
The decision of the Division Bench in the case of Posco India Delhi Steel Processing Centre P Ltd relied upon by the appellant was held to be distinguishable and not applicable to the facts of the case on hand.
The appeal was dismissed.
(See 2017-TIOL-427-HC-AHM-CUS)
