Recently, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) of Bangalore ordered the reconsideration of a refund claim related to the Special Additional Duty (SAD) on timber logs imported by M/s. M.M. Saw Mills & Industries. The case, revolving around the correct conversion ratio for timber logs, was remanded to the Commissioner of Customs (Appeals) after the Tribunal condoned a 22-day delay in filing the appeal.
The case traces back to February 1, 2002, when the appellant/ assessee, M/s. M.M. Saw Mills & Industries, a timber importer based in Kerala, filed two Bills of Entry to clear timber logs at a customs station. The central issue in the case was the conversion ratio used to calculate the timber logs, which was originally adopted as 1 Hoppus Ton equaling 1.416 cubic meters ( CBM ). This ratio played a pivotal role in determining the quantity of the imported timber and the duty imposed on it.
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The issue intensified when the assessee later sought to claim an exemption under Notification No. 102/2007-Cus., dated September 14, 2007, which allowed a refund of the 4% SAD paid on imported goods, subject to certain conditions. However, when the adjudicating authority processed the refund claim, it applied a different conversion ratio of 1 Hoppus Ton equaling 1.8027 CBM, as specified by a Public Notice issued by the Commissioner of Customs, Mangalore, in 2012. This discrepancy notably reduced the refund amount granted to the assessee.
Dissatisfied, the assessee appealed to the Commissioner of Customs (Appeals), Bengaluru, arguing that the original conversion ratio of 1 Hoppus Ton equaling 1.416 CBM—used at the time of import—should have been applied in determining the refund. While the Commissioner (Appeals) agreed on the technical aspect of the conversion ratio, the appeal was dismissed on procedural grounds. The appellant had filed the appeal 22 days beyond the 60-day statutory period allowed for filing appeals under Section 128(1) of the Customs Act, 1962. Though the law permits a further 30-day period for condonation of delay, the Commissioner (Appeals) rejected the appeal, citing insufficient justification for the delay.
Aggrieved by this dismissal, the assessee approached the CESTAT.
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Before the tribunal, the appellant contended that the 22-day delay was well within the condonable period and had occurred due to personal reasons affecting the authorized person handling the case. It was submitted that the delay was not intentional and that the appellant had a strong case on merits, particularly with regard to the conversion ratio and the refund entitlement. In support, the appellant cited similar cases where delays were condoned, including Sun Pharmaceuticals Industries Ltd. vs. Commissioner of C. Ex. & S.T., Vadodara and Shiva Mint Industries vs. C. Ex., Jalandhar.
On the other hand, the Revenue’s representative opposed the condonation, arguing that the reasons presented were inadequate and urging the Tribunal to uphold the dismissal, referencing earlier rulings like DHR Holdings India Pvt. Ltd. vs. CC, New Delhi.
After reviewing the submissions, the bench of Mr PR Augustine and Mr Pullela Nagaswera Rao observed the appellant’s explanation for the delay to be credible and ruled that the 22-day delay was condonable under the Customs Act. The Tribunal stressed that the appellant should be given an opportunity to present their case on merits, particularly regarding the disputed conversion ratio. The case was remanded to the Commissioner (Appeals), who was directed to examine the refund claim in light of the correct conversion ratio applied at the time of import.
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