In a recent case, the Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the recovery of a Special Additional Duty (SAD) refund is not valid when assessee has complied with all conditions under refund notification.
Shyam Timber Pvt Ltd, the appellant challenged the order by which the Adjudicating authority rejected refund claims filed by the appellants under Notification No. 102/2007-Cus., dated 14-92007.
The appellants had filed refund claims of additional duty of customs which were sanctioned to the appellant vide various Orders-In-Original. It was submitted that the Appellant had claimed a refund of 4% SAD that had been paid at the time of import of timber incorrectly by submitting a sale invoice of timber imported under some other Bill of Entry, a search was carried out at the business premises of the appellants by the DGCEI.
The adjudicating authorities were of the view that the appellants have submitted forged documents to the customs authority to get the refund fraudulently. It was found that clearance of different timber did not pertain to the Bill of Entry for which they claimed refunds, preparation of forged invoices etc.
The adjudicating authority passed the impugned orders by denying the benefit under Notification No. 102/2007-CUS dated 14.09.2007 and ordered for recovery of erroneously granted refunds under provisions of Section 28 of the Customs Act, 1962, ordered recovery of interest under provisions of Section 28AB of Customs Act, 1962, and imposed penalty under Section 114A and 114AA of the Customs Act, 1962.
On Appeal, the Commissioner of Customs (Appeals), Ahmedabad upheld the above order-in-originals and dismissed the appeals of the appellants. It was found that the Appellant failed to mention a Bill of Entry Number on the invoices issued to the customer due to keeping the imported price confidential.
It was contended that the appellant did not own any sawmill and used the Gandhidham premises only for the storage of imported timber logs. The revenue failed to appreciate the fact that the Appellant imported round as well as sawn timber and sold the same after paying duty and therefore the condition of the Notification are satisfied.
The Appellant even annexed a statement showing details of the import of timbers and clearances of the same to the customers on payment of VAT/Sales Tax and the statement was duly certified by the Appellant.
Further contended that the refund sanctioned by the original authority being attained finality upto the CESTAT cannot be called an erroneous refund therefore, the proceeding for the recovery of the said refund treated as erroneous is illegal and unwarranted in the eyes of law.
A Single member bench comprising Ramesh Nair observed that since the sanction of refund has been held legal and correct as per the tribunal’s order, the said refund cannot be treated as erroneous, therefore, no order for recovery could have been passed.
Further viewed that the Appellants complied with all the conditions of the above notification, and therefore, actions of the lower authorities for recovery of the refund based on the number of logs not mentioned in the invoices attached with the refund claim is not sustainable. The CESTAT set aside the impugned order and allowed the appeal.
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