By TIOL News Service

MUMBAI, OCT 30, 2014: THE claims filed by the appellant seeking refund of SAD under Notification no. 102/2007-Cus dated 14.09.2007 were rejected by the lower authorities on the ground that the endorsement as required in terms of condition 2(b) of the said Notification was not made on the invoice issued for sale of goods.

Condition 2(b) reads thus -

(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 ;

Before the Tribunal, the appellant had submitted that they are traders issuing commercial invoices and they have sold the imported goods on which they suffered SAD on payment of CST/VAT and as no duty element has been incorporated in the invoice, therefore, taking the benefit of SAD by the buyer does not arise. Further, the SAD is payable by the assessee to safeguard CST/VAT and since the goods have been cleared on payment of CST/VAT, therefore, they are entitled to get the benefit as per the Notification no. 102/07-Cus. Reliance is placed on the decisions of the Tribunal in the case of Equinox Solution Ltd. - 2010-TIOL-1907-CESTAT-MUM & Novo Nordisk India Pvt. Ltd. - 2013-TIOL-1944-CESTAT-MUM .

On the other hand, the AR relied upon the Division Bench decision in the case of Astra Zeneca Pharma India Ltd.- 2013-TIOL-1946-CESTAT-DEL and submitted that the condition of the notification is to be followed strictly and in the said case, the refund claim was denied by this Tribunal.

In view of two contrary decisions,the matter was referred to the Larger Bench to answer the reference as to whether the condition 2(b) is mandatory.

We reported this reference as - 2014-TIOL-639-CESTAT-MUM.

Applying the ratio of the decisions in Mangalore Chemicalsand Fertilizers Ltd.- 2002-TIOL-234-SC-CX and New India Sugar Mills Ltd. [AIR 1963 SC 1207], the Larger Bench concluded 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 . Inasmuch as 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, the Bench held.

The Larger Bench, therefore, concurred with the view taken by the Tribunal in the cases of Equinox Solution Ltd. & Novo Nordisk India Pvt. Ltd. (supra). See - 2014-TIOL-1191-CESTAT-MUM-LB.

The referral Single Member Bench has decided the appeals recently.

The Bench observed -

3. The said reference has been answered by the Tribunal and held that "A trader-importer, who paid SAD on the imported goods 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 Notification 102/2007-Cus”, although they have not made an endorsement on the invoice that credit of duty is not admissible. Therefore, following the decision of the larger bench of the Tribunal, I hold that as the appellants have cleared the imported goods on payment of CST/VAT being a trader under the cover of commercial invoice, therefore they are entitled for refund claim as they have satisfied the condition of Notification 102/07 dated 14.09.2007.

The appeals were allowed with consequential relief and the adjudicating authority was directed to comply with the order within 30 days of receipt.

(See 2014-TIOL-2132-CESTAT-MUM)