2010 (12) TMI 74 - AT - Customs

Refund of SAD - Conditions of notification no. 102/2007 - Refund claim was rejected by the department on the ground that appellants have failed to follow the condition 2(b) of the Notification and (b) the appellants have failed to discharge the burden of bar of unjust enrichment - Held that - As pointed out by the Honrable Apex Court in Malwa Industries (2009 -TMI - 32788 - SUPREME COURT) the exemption Notification should be read liberally - he purpose of issuing the Notification is that the importer should not suffer SAD on the goods imported by them which have been imported for the purpose of resale and the proper ST/CST/VAT has been paid. SAD is to be paid by the importers as precaution measure to ascertain whether ST/CST/VAT has been discharge by the assessee or not. In this case it has been clarified in the invoices which have been supported by the Chartered accountant certificate that the appellants have discharged the liability of Central service tax. Hence as per Notification no. 102/07 the appellants are entitled for the refund claim.

Summary

Issues:
Appeal against denial of refund claim of SAD paid at the time of goods import - Compliance with Notification condition 2(b) and unjust enrichment burden.

Comprehensive Analysis:

Compliance with Notification Condition 2(b):
The appellants contested the denial of their refund claim based on non-compliance with condition 2(b) of Notification no. 102/2007 Cus. The advocate argued that the endorsement requirement on the invoice, as per the condition, was not mandatory for commercial invoices. He referred to the decision in Malwa Industries case to support this stance. The advocate emphasized that without the endorsement, buyers cannot avail credit for the duty paid, making the condition irrelevant for commercial invoices. The Tribunal agreed, citing the need for duty mention in the invoice for credit availability. The Tribunal interpreted the Notification liberally, following the Apex Court's guidance, and concluded that the purpose was to prevent SAD on goods imported for resale, where proper taxes had been paid. The invoices, supported by a Chartered Accountant certificate, confirmed the payment of Central service tax, making the appellants eligible for the refund claim under the Notification.

Unjust Enrichment Burden:
Regarding the issue of unjust enrichment, the Revenue argued that the balance sheet should reflect the amount receivable from the department to satisfy this bar. They relied on a Board circular for this requirement. However, the advocate presented a standing order and a Board circular indicating that a Chartered Accountant certificate could suffice to prove the absence of passing on the SAD incidence to buyers. The Tribunal found the CA certificate provided by the appellants satisfactory in demonstrating the absence of passing on the SAD burden. Consequently, the Tribunal held that the lower authorities were incorrect in rejecting the refund claim, as both the Notification condition and unjust enrichment burden were adequately addressed by the appellants. Thus, the Tribunal allowed the appeals, setting aside the impugned orders and granting consequential relief to the appellants.