TMI Blog2017 (10) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... d be sold locally and that the conditions stipulated in para-2 should be fulfilled - the timber logs imported by any one, when cut into smaller logs, do not lose the character of being timber logs. More over, the size of timber logs that could be imported in huge ships, will be so large that they cannot be transported locally in trucks on roads. What the department had done, is to read one more condition into the exemption notification, which is not found in the notification itself. It is not the case of the department that goods falling under one classification are entitled to exemption and the goods falling under another classification are not entitled to exemption. What is claimed is only the refund of the special additional duty. The special additional duty is payable on the goods that fall under the First Schedule to the Customs Tariff Act 1975, in terms of Section 3 (5) of the Act. The fact that the imported logs fall under the First Schedule to the said Act and the fact that as a consequence special additional duty was paid and the importer became entitled to refund, are all not denied. It is not the case of the department that round/square logs falling under Heading 4403 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect that the refund claims are allowed (i) subject to the outcome of the appeal before the Supreme Court and (ii) subject to the further condition that a bank guarantee is furnished for half of the amount claimed as refund. The Original Authority did not adopt such a course of action - As a matter of fact, if the adjudicating authority had passed orders-in-original incorporating the same conditions as found in the interim order of the Supreme Court in Variety Lumbers Pvt. Ltd., incorporating a condition that the refund was ordered subject to the outcome of the decision before the Supreme Court, the department would have been better of. If the original authority had passed such an order, the department would have become entitled to recover the amount of refund, in the event of their success before the Supreme Court in Variety Lumbers Pvt. Ltd. The department let go this opportunity and invited an order on merits from the Tribunal - the Tribunal was right in rejecting the Miscellaneous Applications - decided against the appellant/revenue. Appeal dismissed - decided against Revenue. - C.E.A. Nos. 57, 60, 61, 62, 66, 69, 71, 72, 74 and 75 of 2017 - - - Dated:- 12-10-2017 - V. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.9,83,594.00 ps. Rs.8,68,328.00 ps 66 of 2017 10-05-2013 Rs.8,78,126.92 ps. Rs.5,86,004.00 ps 69 of 2017 20-12-2012 Rs.7,28,970.20 ps. Rs.3,90,440.00 ps 71 of 2017 08-10-2012 Rs.3,85,709.80 ps Rs.2,15,024.00 ps 72 of 2017 17-09-2012 Rs.8,82,612.10 ps. Rs.6,58,667.00 ps 74 of 2017 24-09-2012 Rs.13,91,801.80ps Rs.9,10,318.00 ps 75 of 2017 05-11-2012 Rs.7,84,837.00 ps Rs.2,07,219.00 ps 6. The disallowance of a part of the refund claim was on two grounds viz., (1) that the timber logs imported by the respondentassessee were not sold as such by them, but were sold locally after sawning them and cutting them into smaller sizes; and (2) that the logs cut into smaller sizes c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had no alternative but to refund the amount. 10. Thereafter, the appellant/revenue came up with the above appeals with applications for condonation of delay. Despite stiff opposition from the respondent-assessee, this Court allowed the delay condonation applications, only in view of the fact that the matter required examination, in view of the Supreme Court granting leave to appeal against the judgment of Gujarat High Court. Thus, the above appeals got numbered and were taken up for hearing. 11. The substantial questions of law with which the appellant/ revenue has come up with the above appeals are as follows: 1. Whether the CESTAT was justified in placing reliance on Commissioner of Customs vs. M/s. Variety Lumbers Pvt. Ltd., and C.C. Kandla vs. M/s. Agrawala Timbers Pvt. Ltd., (supra) where the appellant Department had filed Appeal before the Supreme Court and the same is pending for adjudication? 2. Whether the CESTAT was justified in allowing the respondent s appeal and declaring that the respondent is eligible for refund of SAD relying on the judgment in Commissioner of Customs Vs. M/s. Variety Lumbers Pvt. Ltd., and C.C. Kandla Vs. M/s. Agarwala Timbers Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stayed by the Supreme Court, to come to the very same conclusion. 15. In cases where an interim stay is granted by the Supreme Court only in respect of further proceedings, the principle of law laid down by the High Court does not get automatically suspended. In cases where no stay is granted by the Supreme Court, the Tribunal is entitled to follow the judgment of the High Court that is under appeal. 16. In the case on hand, the Supreme Court did not grant either a stay of operation of the judgment or a stay of further proceedings pursuant to the judgment of the Gujarat High Court. Therefore, the Tribunal was bound to follow the judgment of the Gujarat High Court and the first question of law has to be answered in favour of the respondent-assessee. 17. Despite our above conclusion on first question of law, we would also go into the more fundamental question, to test the genuineness of the grievance of the appellant/revenue. The grievance of the appellant/revenue is that a person not entitled to the benefit of exemption notification, cannot walk away with a refund. According to the appellant/revenue, the department was fair enough to order refund of a portion of the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted 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. 19. It is not indicated anywhere in the notification extracted above, that the imported goods should be sold as such, so as to qualify for exemption. All that the notification says is that the imported goods should be sold locally and that the conditions stipulated in para-2 should be fulfilled. 20. As rightly observed by the Gujarat High Court, the timber logs imported by any one, when cut into smaller logs, do not lose the character of being timber logs. More over, the size of timber logs that could be imported in huge ships, will be so large that they cannot be transported locally in trucks on roads. What the department had done, is to read one more condition into the exemption notification, which is not found in the notification itself. 21. Mrs. Sundari R. Pisupati, learned senior standing counsel placed heavy reliance upon a Circular bearing No.15/2010-Customs, dated 29-6-2010, wherein the Government imposed certain conditions in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this modus operandi of submitting the forged documents for claiming refund fraudulently. 4. It is apprehended that above mentioned modus operandi may have all India ramifications and may be prevalent in other field formations and are not limited only to a few cases. In view of the above, all field formations are directed to be alert and vigilant to ensure that unscrupulous importers do not avail fraudulent refunds of 4% SAD in terms of Notification No.102/2007-Customs dated 14.09.2007 by resorting to the above mentioned modus operandi. 22. On the basis of the above circular, it is contended by the learned senior standing counsel for the department that the moment the imported goods undergo some change, they would lose the benefit of the exemption notification, since the goods originally imported may fall under one classification while those that are obtained after a process, may fall under a different classification. In the case of the assessee itself, the round and square logs of wood come under classification Heading 4403, whereas sawn wood falls under classification Heading 4407. Therefore, it is contended by the learned senior standing counsel for the department th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of special additional duty that was not paid by him. No importer can claim refund of SAD (special additional duty) paid on the imported logs, by showing the sale of locally purchased wood logs. This is in view of the fact that the imported timber logs may have to be sold in any case in the local market. If the Government of India wanted the importers of timber not to have the benefit of the exemption notification, if they indulged in the sale of smaller pieces, the Government could have said so in the notification itself. 27. Once it is clear that by making a mismatch between the description contained in the original packing list and the description of the goods locally sold, an importer may not be able to claim refund of more than what was paid, then it would follow as a natural corollary that the second objection of the department is merely weaved out of imagination. Hence, even on merits, we find that the ultimate conclusion reached by the Gujarat High Court in Variety Lumbers Pvt. Ltd., appears to be the probable view. 28. In fact, we have chosen to go into the merits, despite the department not raising the aforesaid two issues as substantial questions of law before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uarantees shall be kept alive till disposal of these appeals. The quantum of payment of interest to the successful party shall be considered at the time of final disposal of the appeals. 34. As rightly contended by Mr. K. Vijay Kumar, learned counsel for the respondent-assessee, the interim order of the Supreme Court extracted above, is dated 24-11-2011. The orders-inoriginal were passed in all these appeals, on 08-01-2013, 28-09- 2012, 05-11-2012, 20-12-2012, 10-05-2013, 20-12-2012, 08-10- 2012, 17-09-2012, 24-09-2012 and 05-11-2012. 35. In other words, the orders-in-original, out of which all the present appeals arise, were passed long after the interim order of the Supreme Court dated 24-11-2011. Therefore, the Jurisdictional Customs Officer, instead of showing great valour in challenging the ratio laid down by the Gujarat High Court, could have simply allowed all the refund claims with a brief order to the effect that the refund claims are allowed (i) subject to the outcome of the appeal before the Supreme Court and (ii) subject to the further condition that a bank guarantee is furnished for half of the amount claimed as refund. The Original Authority did not adopt suc ..... 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