In a significant case, the Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) upheld the Special Additional Duty (SAD) refund allowed by the Commissioner relying upon CA Certificate to LG Electronics India.
The assessee filed a refund claim for the whole of the additional duty of customs paid at the time of import of electronic goods which were subsequently sold in the domestic market with proper sales invoice. It was observed that the goods were declared as “LG Brand Super Multi DVD Re-Writer, LG Brand DVD-Writer Drive etc”, whereas the description of goods in the Bill of Entries was “LG Brand DVD Writer Drive and LG Brand DVD ROM Drive”.
Further, though the importer had submitted a Chartered Accountant’s certificate, the same was allegedly not following the Board’s Circular as there was no emphatic declaration to the effect that unjust enrichment was not applicable and that the duty was not passed onto the ultimate customer. The proper officer found the claim to be in order and sanctioned an amount of Rs 43,98,398/- as a refund of 4% SAD amount to the appellant.
Aggrieved by the sanction of refund, Department filed an appeal against the said order before the Commissioner (Appeals). The learned Commissioner (Appeals) after following relevant procedures, upheld the order of the lower authority.
It was argued that the lower authority failed to note that the goods imported by M/s Sri LG Electronics vide Bill of Entries were “LG Brand DVD Writer Drive and LG Brand DVD ROM Drive”, whereas the goods sold through sales invoices were described as “LG Brand Super Multi DVD Re-Writer, LG Brand DVD-Writer Drive etc”. Further alleged that as per Board’s circular 6/2008, while sanctioning a refund the principle of unjust enrichment needs to be examined in each case.
As per Board Circular F No 6/2008 – Customs dated 28/04/2008 and the Customs Public Notice No 14/06/2011 of Chennai Custom House dated 14.6.2011 the Chartered Accountant is required to do 100% verification of invoices before submission of the refund claims.
It was evident that the claim of refund of Rs.43,98,399/- is out of the additional duty of customs paid on goods imported against the Bill of Entries and sold by the company and has been recorded in the books of accounts as ‘claims recoverable’ from the Customs Department. The additional duty had not been passed on to the buyers and was retained by them as shown in their books of accounts.
M/s. LG Electronics India P. Ltd. has imported goods claiming exemption under Notification No.102/2007-Cus. dated 14.9.2007. The Commissioner (Appeals) noted that the revenue has not produced any documentary evidence at any stage of the appeals to show that discrepancy exists between the description of goods imported and those sold.
The two-member Coram comprising of Ms Sulekha Beevi C.S.(Judicial) and Shri M. Ajit Kumar(Technical) viewed that the certificate of the Chartered Accountant submitted mentioned that the claim of Rs.43,98,399 is out of Additional Duty of Customs and has been recorded in the books of accounts as ‘Claims Recoverable’ from Customs Department.
It was found by the CESTAT that the Boards Circular only requires the statutory auditor/Chartered Accountant who certifies the importer’s annual financial accounts under the Companies Act or any statute, to explain how the burden of 4% CVD has not been passed on by the importer and to fulfil the requirement of unjust enrichment. The Tribunal rejected the appeal filed by the Revenue and upheld the impugned order.
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