Failure to Endorse ‘No CENVAT Credit Admissible’ on Commercial Invoices Is Only a Procedural Lapse: CESTAT Grants SAD Refund [Read Order]

The Chennai Bench of the Customs, Excise, andService Tax Appellate Tribunal (CESTAT) ruled that failure to endorse “no CENVAT credit admissible” on commercial invoices is a procedural lapse and not a substantive bar, and granted the appellant refund of Special Additional Duty (SAD).

Palfinger Cranes India Pvt. Ltd., the appellant, had imported cranes and crane parts and paid 4% SAD at the time of import. They later filed refund claims under Notification No. 102/2007-Cus dated 14.09.2007, on the ground that VAT/CST had been paid on subsequent sales.

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The adjudicating authority rejected the claims because the sales invoices did not contain the mandatory endorsement stating that “no CENVAT credit would be admissible,” as required by condition 2(b) of the notification. The Commissioner (Appeals) upheld the rejection.

The appellant’s counsel argued that the purpose of the endorsement requirement was to prevent double benefit of refund and CENVAT credit. Since their sales invoices were commercial invoices without any duty details, CENVAT credit could not be availed. It was further argued that all evidence of VAT/CST payment and returns had been produced and that refund should not be denied for a mere procedural lapse. Several judicial precedents were cited to support the claim.

The department’s counsel argued that condition 2(b) of the notification was mandatory and the refund claims could not be allowed without compliance.

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The two-member bench comprising M. Ajit Kumar (Technical Member) and P. Dinesha (Judicial Member) observed that the issue was already examined by a Larger Bench of the Tribunal in Chowgule & Co. Pvt. Ltd. v. CCE which held that trader-importers issuing commercial invoices without duty details are entitled to refund under Notification No. 102/2007, even without the endorsement, provided other conditions are satisfied. The tribunal explained that judicial discipline required them to follow the Larger Bench ruling.

The tribunal set aside the impugned orders and allowed the appeals, holding that the appellant was eligible for SAD refund subject to the satisfaction of other conditions. The tribunal directed consequential relief as per law.

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