Whether request to transfer the case to call book till the final decision of Tribunal when the same issue of same assessee pending before Commissioner Appeals is acceptable?

PJ/Case Study/2013-14/55

18 May 2013

PJ/Case Study/2013-14/

CASE STUDY

Prepared by:-CA Neetu Sukhwani &
Bharat Rathore

Introduction:-

The assessee was issued with a Show cause notice proposing recovery of the refund amount alleged to have been sanctioned erroneously. The refund amount pertained to SAD refund filed in terms of the Notification no. 102/2007-Cus dated 14.09.2007. It was proposed to deny the refund claim due to the contention that the assessee had passed on the incidence of the said amount of SAD to their customer resulting in unjust enrichment. The adjudicating authority confirmed recovery of the amount along with interest and credited the refund amount to the consumer welfare fund. The assessee then preferred an appeal to the Commissioner Appeals. The same issue was also pending in case of the same assessee in CESTAT and so appellant also requested to transfer the matter to the call book till the outcome of the final decision of the CESTAT.

M/s. G.R. Alloys Pvt. Ltd. v/s Assistant Commissioner of Customs, ICD, Khodiyar

[Order-In-Appeal no. 202/2013(CUS)/Ahd/2012 dated: 12/03/2013]

Relevant Legal Provisions:-

Notification No. 102/2007-Customs

New Delhi, the 14^th September, 2007

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the goods falling within the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India for subsequent sale, from the whole of the additional duty of customs leviable thereon under sub-section (5) of section 3 of the said Customs Tariff Act (hereinafter referred to as the said additional duty).

2. The exemption contained in this notification shall be given effect if the following conditions are fulfilled:

(a) the importer of the said goods shall pay all duties, including the said additional duty of customs leviable thereon, as applicable, at the time of importation of the goods;

(b) the importer, while issuing the invoice for sale of the said goods, shall specifically indicate in the invoice that in respect of the goods covered therein, no credit of the additional duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible;

(c) the importer shall file a claim for refund of the said additional duty of customs paid on the imported goods with the jurisdictional customs officer;

(d) the importer shall pay on sale of the said goods, appropriate sales tax or value added tax, as the case may be;

(e) the importer shall, inter alia, provide copies of the following documents alongwith the refund claim:

(i) document evidencing payment of the said additional duty;

(ii) invoices of sale of the imported goods in respect of which refund of the said additional duty is claimed;

(iii) documents evidencing payment of appropriate sales tax or value added tax, as the case may be, by the importer, on sale of such imported goods.

3. The jurisdictional customs officer shall sanction the refund on satisfying himself that the conditions referred to in para 2 above, are fulfilled.

Issue: - Whether request to transfer the case to call book till the final decision of Tribunal when the same issue of same assessee pending before Commissioner Appeals is acceptable?

Brief Facts:- The appellant had filed a refund claim amounting to Rs. 47,374/- in terms of notification no. 102/2007-Cus dated 14.09.2007 for refund being the 4% Special Additional duty of Customs (SAD) paid by them on the goods, i.e. Aluminium Scrap imported and subsequently sold. Adjudicating authority sanctioned the refund claim vide Order-In-Original. Subsequently, it was observed that the ledger account of the appellant for the year 2009-10 did not show the SAD amount as “income receivables” instead they made a debit entry for the same in the books of account of the appellant for the Year 2010-11. Thus, it appeared that the SAD amount formed part of the cost of goods traded in 2009-10 and thus the appellant had passed on the incidence of the said amount of SAD to their Customers resulting unjust enrichment. Therefore, SCN was issued to the appellant proposing recovery of the refund amount sanctioned erroneously. The matter was adjudicated under the impugned order, confirming recovery of the amount along with interest and credit to the consumer welfare fund. Appellant preferred an appeal before Commissioner (Appeals) against the said order of the adjudicating authority.

Appellant’s Contentions:- The appellant made following submissions before the Commissioner (Appeals):-

The appellant submit that the amount was shown as “Duties and Taxes” under the head “Liabilities” in the Balance sheet for 2009-10 and the same was shown as “Additional Duty Receivable” in the year 2010-11 after filing refund claim. The appellant also submit that the issue was properly explained by them in reply to the SCN but adjudicating authority not discussed the same. The appellant further submit that the amount was never transferred to the Profit and Loss account, and was shown as an item “Duties and Taxes” and the sum Total of such items is shown as their Liability in the Balance Sheet, hence the contention of the adjudicating authority was wrong. The appellant also pleaded that they had debited the amount on 05.02.2010 towards import duty, and subsequently transferred the same as receivable amount on 30.06.2010, and this entry was squared up on 08.10.2010 after receipt of the refund amount. The appellant also submit that they had not filed any refund claim at the end of the financial year and hence it cannot be considered that they had passed on the duty incidence to their customers.

The appellant also submits that they have already filed an appeal against Order-In-Appeal No. 253/2011/Cus/Commr (A)/AHD dated 23.06.2011 passed by the Commissioner (Appeals) under which the Order-In-Original Sanctioned refund amount was set aside, and since the said appeal is pending before Hon’ble CESTAT for final decision, no adverse action is required to be taken in the matter.

The appellant also relied upon following judgments:-

v Sardara Singh-2008-TIOL-160-SC-NDPS;
v SrikumarAgencies-2008(232) ELT 577 (SC)
v Essar Oil Limited – 2010-TIOL-560-HC-AHD-CUS;
v Nisha Cements- 2010-TIOL-1255-CESTAT Bang.
v South India paper Mills Ltd. 2009(238) ELT 651(Tri. Chennai)
v Organan India Ltd.- 2008(231) ELT 201 (SC)
v Kudremch Iron & Steel Co. ltd. 2007 (217) ELT 286 (Tri. Bang.)
v Wartsila India Ld.-2010-TIOL-489-HC-MUM-CUS
v Cable Corporation of India Ltd. 2010-TIOL-607-HC-Mum-Cx
v VE Commercial Vehicles Ltd. – 2011-TIOL-68-SC-CX

The appellant further pleaded that the department had earlier preferred an appeal in the same case which was decided against the appellant. Consequently, they have filed an appeal before Hon’ble Tribunal which is pending. Thus there are two proceedings on the same issue. Therefore appellant stated that the matter is fit for transfer into call book till the decision of the Tribunal in the said appeal.

Respondent’s Contention:- The respondent’s contention is that the ledger account of the appellant for the Year 2009-10 did not show the SAD amount as income receivables, instead they made a debit entry for the same in the books of account of the appellant for the Year 2010-11. Thus, it appeared that the SAD amount formed part of the cost of goods traded in 2009-10 and thus the appellant had passed on the incidence of the said amount of SAD to their Customers resulting in unjust enrichment.

Reasoning of the Commissioner (Appeals):-

The Commissioner (Appeals) held that the present issue had already come up before them in the form of another appeal filed by the department earlier against Order- In-Original under which the adjudicating authority sanctioned the aforesaid refund. The present appeal has been filed by the appellant against the impugned order under which adjudicating authority has ordered recovery of refund amount erroneously sanctioned to them. Thus the same issue has already been discussed in Order-In-Appeal. Therefore, the doctrine of res judicata would apply, and thus the present appeal is not maintainable before them. The appellant have informed that they have already filed appeal before Hon’ble CESTAT, Ahmedabad against the said earlier order, and the decision of Hon’ble Tribunal would resolve the present issue also. In view of the above facts and circumstances, the present appeal is not maintainable and stands dismissed. In view of above, the commissioner (Appeals) dismissed the appeal.

Decision:- The appeal was dismissed.

Conclusion:- The appeal was dismissed following the principle of res-judicata which precludes the same parties to file case to different legal systems to avoid continued litigation and also to avoid conflicting decisions. In the instant case also, as the Commissioner Appeals had taken a stand that refund in case of the present appellant was not admissible and also in view of the fact that the appeal against the said order has been preferred by the appellant to the CESTAT, the appeal was dismissed.

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PJ/Case Study/2013-14/55
18 May 2013

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