Rejection of SAD refund for passing on the cenvat credit of SAD.

PJ/CASE LAW/2015-16/2835

Case:-ZARHAK STEELS LTD. VERSUSCOMMR. OF CUS. (EXPORT), MUMBAI

Citation:- 2015 (322) E.L.T. 545 (Tri. - Mumbai)

Brief facts:- This appeal arising out of Order-in-Appeal No. MUM-CUSTM- SXP-357-12-13, dated 12-6-2012 passed by the Commissioner of Customs (Appeals), Mumbai Zone-I, wherein the ld. Commissioner (Appeals) upheld the Order-in-Original. The fact of the case is that the appellant filed the refund claim of Rs. 18,52,267/- in respect of 4% SAD paid on the goods imported under bills of Entry Nos. 2629099/21-1-2011, 2629104/21-1-2011, 2637812/24-1-2011 and 2684619/31-1-2011. The adjudicating authority has sanctioned the refund claim for an amount of Rs. 13,00,507/- and rejected the claim of Rs. 5,51,761/- on the ground that the importer has passed on 4% SAD to the buyers as evident from certified copy of Excise invoices and RG 23 extract. The appellant filed the appeal before the Commissioner of Customs (Appeals) against rejection of claim of Rs. 5,51,761/-. The ld. Commissioner (Appeals) rejected the appeal of the appellant and upheld the original order. Aggrieved by the said order the appellant is before tribunal.

Appellant’s contention:- Shri. J.C. Patel, ld. Counsel for the appellant submits that though in the excise invoices 4% SAD was mentioned along with CVD and Education Cess thereof, a stamp was affixed to the effect that “no credit of additional duty levied under Section 3(5) of the Customs Tariff Act, 1975 shall be admissible”. He also referred to the certificate issued by all the relevant buyers that Cenvat credit of 4% SAD was not availed by them. He has also drew attention to all the RG 23 register of the buyers wherein it clearly appears that the buyer has availed the Cenvat credit only in respect of CVD and Cess related thereto. RG 23 Register does not show availment of Cenvat credit in respect of 4% SAD. He submits that from all these evidences, it is clear that the Cenvat credit in respect of 4 % SAD was neither passed on by the appellant nor availed by the buyers therefore the refund should not have been rejected on the ground that importer has passed on 4% SAD to the buyers.

Respondent’s contention:- On the other hand, Shri M.K. Mall, ld. Asst. Commissioner (AR) appearing for the Revenue reiterates the finings of the impugned order. He further submits that in the excise invoices issued by the appellant, 4% SAD was mentioned which shows that Cenvat credit in respect of SAD has been passed on.

Reasoning of judgment:-Theyhave carefully considered the submissions made by both the sides and perused the records.
From the invoices of the appellant it is observed that in addition to CVD there is mention of 4% SAD also. However, on the same invoices there is stamp affixed which indicates as “no credit of additional duty levied under Section 3(5) of the Customs Tariff Act, 1975 shall be admissible”. They also perused certificate issued by the buyers of the goods wherein it is certified that the buyers have availed Cenvat credit in respect of CVD and Education Cess thereto and it also certified that Cenvat Credit of Special Additional Duty (4%) have not been availed. These certificates have been attested by the Jurisdictional Range Officer. The ld. Counsel drawn their attention to RG 23 register/Cenvat account of the buyers from which fact is undisputed that RG 23/Cenvat account shows the availment in respect of CVD, Education Cess thereto only and it does not bear the availment of Cenvat of 4% SAD.
From these facts, it is clear that the appellant has neither passed on Cenvat credit of 4% SAD to the buyers nor the buyers have availed Cenvat credit of SAD. They are of the view that as per the Notification 102/2007-Cus., and Board’s Circular prescribed the procedure. The only requirement, as regards Cenvat credit is that the claimant should make endorsement on the invoice that the Cenvat credit in respect of additional duty should not be availed by the buyers. The said compliance was undisputedly made by the appellant on their sale invoices. In view of the above discussions on the facts which is not under dispute, They are of the view that the refund of Rs. 5,51,761/- is admissible to the appellant. The appeal is therefore allowed with consequential relief, if any, in accordance with law.

Decision:- Appeal allowed.

Comment:-The analogy of the case is that the Stamp affixed on invoice indicates that no credit of Additional duty was passed on to the buyers and so the refund of SAD is not deniable to the appellants. Furthermore, the buyers also certified that no Cenvat credit was availed for SAD portion. Appellant neither passed on the credit of SAD nor buyers availed cenvat credit of SAD. As per Notification 102/2007-Cus., and Board’s Circular only requirement as regards Cenvat credit is that the claimant should make endorsement on the invoice that the Cenvat credit in respect of additional duty should not be availed by the buyers. As the said condition was duly satisfied in the present case, refund was held to be admissible.

Prepared by:- Monika Tak

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PJ/CASE LAW/2015-16/2835

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