The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Chennai has ruled in favour of Noritsu India Pvt. Ltd., holding that minor procedural lapses should not prevent taxpayers from receiving a refund of the 4% Special Additional Duty ( SAD ) when taxes are fully paid and compliance is evident.
The CESTAT addressed the procedural discrepancies in invoices and Chartered Accountant (CA) certifications that led to the rejection of Noritsu’s refund claim by the Customs Department.
Boost Your Business with SME IPO Funding Strategies – Enroll Now
The appellant, Noritsu India Pvt. Ltd., had originally filed a refund claim of Rs.5,03,829 under Notification No. 102/2007 for SAD on imported photofinishing equipment during 2013. The refund claim was supported by sales invoices, VAT (Value Added Tax)/ Central Sales Tax (CST) payment challans and tax returns to prove that the required duties had been paid.
The appellant also submitted a CA certificate and correlation sheet, showing that their “Commercial Invoices” and “Tax Invoices” were aligned, as required for the refund claim.
Boost Your Business with SME IPO Funding Strategies – Enroll Now
The Customs Department initially rejected the claim on procedural grounds, noting that some invoices lacked specific endorsement language mandated under Paragraph 2(b) of the 2007 Notification. The endorsement required is intended to prevent improper Central Value Added Tax (CENVAT) credit claims.
The department also found that the CA had not certified each sales invoice, raising doubts about compliance. This rejection was upheld by the Commissioner (Appeals), which prompted the appellant to bring the matter before the CESTAT.
Boost Your Business with SME IPO Funding Strategies – Enroll Now
The appellant, represented by Ms. J. Mercy argued that these omissions were minor and procedural, not material violations, asserting that all relevant taxes were correctly paid.
The appellant relied on several previous CESTAT rulings, including HBD Packaging Pvt. Ltd. and Kamadhenu Polymers, where procedural omissions were deemed insufficient grounds for denying SAD refunds when tax compliance was verified.
The appellant argued that the statutory language in the 2007 Notification did not restrict goods sold through branch transfers, which was their method of transferring the goods from Chennai to Bengaluru.
Boost Your Business with SME IPO Funding Strategies – Enroll Now
The respondent revenue, Principal Commissioner of Customs, represented by Shri N. Satyanarayanan contended that the appellant’s refund claim was improperly supported, citing discrepancies in the description of goods between the sales invoices and the imported items.
They argued that the CA certificate did not adequately certify the invoices, violating the endorsement requirements specified in Notification No. 102/2007.
The CESTAT found that the appellant’s minor procedural oversights did not justify a refund rejection. The bench noted that the appellant had fulfilled the substantive tax requirements by paying VAT and CST on the resale of imported goods, regardless of procedural issues.
Boost Your Business with SME IPO Funding Strategies – Enroll Now
Moreover, CESTAT acknowledged that these lapses could have been rectified easily had the customs authorities allowed the appellant to amend the documents.
The bench further referenced the Larger Bench decision in Chowgule & Company Pvt. Ltd., wherein it was held that non-mention of duty in the invoice serves as an implicit affirmation that no CENVAT credit was availed, thus satisfying the endorsement requirement by intent.
In light of these findings, the single-member bench of the CESTAT comprising Shri M. Ajit Kumar (Technical Member) concluded that the appellant’s claim should be accepted. The bench stressed the importance of distinguishing between substantive tax compliance and procedural lapses, particularly when minor errors can be easily cured.
Boost Your Business with SME IPO Funding Strategies – Enroll Now
The bench highlighted that strict procedural adherence should not overshadow compliance with core tax obligations. Consequently, the bench set aside the order rejecting the appellant’s refund and directed the Customs Department to issue the refund with applicable relief.
The decision affirmed that procedural deficiencies alone cannot negate legitimate refund claims when tax payments are demonstrably made.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
