TMI Blog2013 (11) TMI 1013X X X X Extracts X X X X X X X X Extracts X X X X ..... al taxes such as sales tax or the Value Added Tax as may be applicable. Before transportation of timber, they were required to reduce its size since the RTO rules did not permit transportation of logs longer than 40 feet. If only for cutting length of the logs, which were in excess of 40 feet, sawing operations were carried out and after some cleaning and scaring was done, timber logs of smaller pieces were sold, we do not see how respondents can be stated to have breached any of the conditions of the exemption notification dated 14.9.2007 - Decided against Revenue. - TAX APPEAL No. 86 of 2011, 88 of 2011, 167 of 2011, 678 of 2011, 679 of 2011, 680 of 2011, 688 of 2011, 689 of 2011, 698 of 2011, 699 of 2011, 715 of 2011 - - - Dated:- 7-7-2011 - MR. AKIL KURESHI AND MS SONIA GOKANI, JJ. FOR THE APPELLANT : MR RJ OZA FOR THE RESPONDENT: MR VS NANKANI WITH H.P.MODH ORDER (Per : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. These appeals arise out of similar factual background and involves similar legal issues. In fact, judgment of Customs, Excise Service Tax Appellate Tribunal ("CESTAT" for short) impugned in all these appeals is common. 2. We have, therefore, hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, respondent filed refund claim with the Assistant Commissioner having the jurisdiction over the area on or around 11.8.2008. The case of the respondent was that though under Notification No.19/2006 dated 1.3.2006, he was liable to pay SCVD upon import of timber at the specified rate, by virtue of Exemption Notification No.102 of 2007 dated 14.9.2007, such duty was to be refunded to the respondent importer selling the goods in the local market and also paying appropriate sales tax or value added tax, as the case may be. To this notification, we will make a detailed reference at a later stage. 5. The Assistant Commissioner (Refund), however, by his order in original dated 7.3.2009 rejected the refund claim of the petitioner. In his order, he made following observations:- " The claimant has imported New Zealand Pine logs against Bill of Entry No.223338 dated 01.01.2008 and 226984 dated 29.01.2008 and paid the duty vide TR-6 Challan No.20145061 dated 10.01.2008 in original of TR-6 Challan for Rs.781847/- and 20147998 dated 11.02.2008 in original of TR-6 Challan for Rs.1538208/- inclusive of 4% SCVD amounting to Rs.10,42,693/-. The claimant had produced the copy of Invoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, eligible for refund of SCVD paid. In the judgment, Tribunal referred to and relied upon the decision of the Banglore Bench of the Tribunal in the case of Vijirom Chem. Pvt. Ltd. vs. Commr. of Cus., Banglore reported in 2006(199) ELT 751(Tri.-Bang.). The Tribunal also relied on the decision of the Apex Court in the case of State of Orrisa and others vs. Titaghur Paper Mills Company Ltd. and another reported in 1985(Supp.) SCC (280). Before the Tribunal decision of the Apex Court in the case of Collector of Central Excise, Madras vs. Kutty Flush Doors Furniture Co.(P) Ltd. reported in 1988(35) ELT 6 (SC),was also cited. 9. Before recording and appreciating the rival submissions, following statutory provisions and the notifications holding field need to be noted:- 9.1 Section 3 of Customs Tariff Act, 1975 pertains to levy of additional duty equal to excise duty, sales tax, local tax and other charges. Sub-Section(5) of Section 3 empowers Central Government to levy such additional duty as would counter balance the sales tax, value added tax, local tax or any other charges on article on its sale, purchase or transportation in India by issuing notification in official ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n( 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 good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich they approached CESTAT which by the impugned common judgment, allowed all such appeals. 14. On the basis of facts noted above, and the materials on record, counsel for both the sides made detailed submissions before us for final disposal of the appeals. 15. Learned counsel Mr. R.J. Oza submitted that the respondents imported raw logs of wood which is classified under Customs Tariff Heading No.44.03. In turn what was sold by the respondents in the market was sawn pieces of wood, which is classified differently under Customs Tariff Heading No.44.07. He submitted that on account of this change that the product underwent since its import and before its sale in the local market, the essential condition of the exemption notification dated 14.9.2007 that the importer has imported goods into India for subsequent sale, is not satisfied. He submitted that the refund claim was, therefore, rightly rejected by the Customs authorities. 16. Referring to the decision of Banglore Bench of the Tribunal in the case of Vijirom Chem Pvt. Ltd. v. Commr. of Cus., Banglore (supra), the counsel submitted that the same was rendered in the background of earlier notification, which was not applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount to manufacturing activity. Heavy reliance was placed on the decision of the Apex Court in the case of State of Maharashtra vs. M/s. Shiv Datt and Sons ors. reported in 1993 Supp(1) SCC 222. Reliance was also placed in this regard on the decision of Karnataka High Court in the case of Y. Moideen Kunhi and others vs. Collector of Central Excise, Banglore others reported in 1986(23) E.L.T. 293 (Kar.), wherein it was held that conversion of timber logs into small sizes, planks, beams etc. by sawing does not amount to manufacturing of goods. 22. Counsel submitted that having imported timber from abroad, the respondents had to cut them into small pieces since RTO Rules would not permit them to transport such timber which is longer than 40 feet. He submitted that the respondents, therefore, had no choice but to cut the imported timber into small pieces. Simply because such item is covered under Customs Tariff Heading No.4407 for the purpose of customs duty as compared to Tariff Heading No.4403 covering timber, would not, by itself, mean that conditions of exemption notification were not fulfilled. 23. Counsel further submitted that in all sales of goods sold by the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the contention of the Department that to be able to get benefit of the exemption notification importer must sell in the local market, the goods imported in the same condition and any change in the nature of goods would dissentitle the importer from seeking exemption from the SCVD paid. 27. We are of the opinion that whether the conditions are to be satisfied or not, has to be viewed from attending facts and circumstances of the case. The words "when imported into India for subsequent sale" or "the sale of said goods", cannot be seen in isolation. It is not in dispute that except for the above mentioned objection of the department, all other conditions specified in the exemption notification, have been fulfilled by the respondents. It is also not in dispute that the proper documents were filed and that the goods were imported after paying the SCVD, upon which ultimately the goods were sold in the local market and Sales tax or VAT, as applicable, was also paid. 28. The question of fulfilling the condition of sale of the imported goods in the local market in the same condition, at the time of its import has to be seen in the light of the two crucial factors. 29. Firstly as hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itable for building ( as a house or boat" or for carpentry or joinery". A 'log' according to the Shorter Oxford English Dictionary means " a bulky mass of wood; now usually an unhewn portion of a felled tree, or a length cut off for firewood" and according to the Concise Oxford Dictionary it means "unhewn piece of felled tree, or similar rough mass of wood especially cut for firewood". Thus, logs will be nothing more than wood cut up or sawn and would be timber. 91. A question which remains is whether beams, rafters and planks would also be logs or timber. The Shorter Oxford English Dictionary defines ' beam' inter alia as a larger piece of squared timber, long in proportion to it breadth and thickness: and the Concise Oxford Dictionary defines it as a "long piece of squared timber supported at both ends, used in houses, ships, etc." and according to Webster's Third New International Dictionary, it means " a long piece of heavy often squared timber suitable for use in house construction". A beam is thus timber sawn in a particular way. 'Rafter' as shown by the Shorter Oxford English Dictionary is nothing but " one of the beams which give shape and form to a roof, and bear the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first respondent firm of timber by the State Government from which logs were made by the respondent firm cannot be made liable to sales tax as it would amount to levying tax at two points in the same series of sales by successive dealers assuming without deciding that the retrospectively substituted definition of 'dealer' in clause (c) of Section 2 of Orissa Sales Tax Act, 1947, is valid. " 32. From the above, it can be seen that though, at the time of import, the respondents brought into the country, raw logs or timber, and before selling it in the open market in India, cut them into smaller pieces by sawing, no new product, in our view, came into existence. Identity of the article did not undergo any fundamental change so as to conclude that what was imported by the respondents-importers was different from the item which ultimately was sold by them in the local market. 33. Second significant factor, which attracts our attention is that as stated by the counsel for the respondents, they were, under the law, obliged to reduce the length of the timber before its transport. RTO authorities would not permit transportation of the timber which is longer than 40 feet. 34. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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