Import of Timber Logs made by Payment of Due Amount of Customs Duty and SAD: CESTAT allows Refund against unsold goods [Read Order]

The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed refund against unsold goods as the import of timber logs made by the payment of due amount of customs duty and Special Additional Duty (SAD).

The appellant, M/s New Timber Industries, is a proprietary concern doing import and supply of timber logs. As part of their routine business, they have imported teakwood and filed a Bill of Entry. At the time of import, appellant also paid 4% additional duty amounting to ₹ 2 ,96 ,524/-. After sale of considerable part of the goods, appellant submitted a refund application for refund of 4% additional duty paid at the time of import.

The Adjudicating Authority only allowed sanction of refund of ₹1,84 ,084/ - and rejected the claim of ₹ 1 ,12 ,440/-. The appellant filed an appeal before the Appellate Authority and the Appellate Authority also upheld the order issued by Ad judicating Authority on the ground that the timber logs imported by the appellant was subsequently subject to process like sawing and cutting and due to that reason appellant is not eligible for the refund. Aggrieved by said order, present appeal is filed.

The counsel for the appellant submitted that the observations made in the impugned order regarding the further process is factually wrong. Even if the timber was subject to any process and had resulted conversion of logs into sawn timber, no manufacturing took place and classification of the imported goods remains the same.

The Counsel further submitted that the special additional duty was introduced with effect from 02.06.1998 in order to introduce a level playing field for domestic industry and to neutralise the local tax imposed on domestic products. If the amount paid by the appellant towards local tax is not compensated by allowing refund of special additional duty paid by the appellant at the time of import, object of said notification will be vitiated.

The Departmental Representative who appeared on the behalf of the respondent submitted that the timber logs imported by the appellant was subject to some process and due to that reason, the goods are not sold as imported and not eligible for the benefit of notification.

A Two-Member Bench comprising PA Augustian, Judicial Member and R Bhagya Devi, Technical Member observed that “We have gone through the facts and submissions made by both the sides. It is an admitted fact that import was made by the appellant by paying the due amount of customs duty and special additional duty. Refund application was submitted only after disposal of considerable part of the goods imported by the appellant with sufficient evidence regarding payment of local tax.”

“Thus, appellant is entitled for the refund of Rs.1,04,111/- after deducting Rs.8,329/- against unsold goods with interest in accordance with law. Appeal is partially allowed” the Bench said.

To Read the full text of the Order CLICK HERE

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