Whether submission of duplicate copy of GAR-7 challan due to procedural lapses can be the reason for denial of refund claim when substantive formalities have been complied?

PJ/Case Study/2014-15/99

10 January 2015

CASE STUDY

Prepared by: Lovina Surana

Introduction:

M/s Kansara Modler Ltd. situated in Basni are leading manufacturers of Precision Rollers for bearings. They are registered with the Central Excise Department with the registration no. AAACK090KXM001 for the manufacture of Taper Rollers for bearings falling under chapter sub heading no. 84829130 of the schedule to the Central Excise Tariff Act, 1985. As per the department, assessee has failed to submit the original TR-6 challan or other evidence in original form so on this ground they have rejected refund claim of Rs. 75000. On the contrary, assessee contended that they were unable to furnish original TR-6 challan because the capital goods were imported by them through courier via service provider - M/s DHL Express (I) Pvt. Ltd. This courier company is engaged in importing goods by airways on behalf of the number of importers in India. The payment of various duties on behalf of such importers is being done by this service provider through a consolidated GAR-7 challan. Thus, a single challan may contain the details of duty payments of more than one importer. Such companies do not provide the original copy of GAR-7 to the importers/concerned companies. It is practically not possible to do so as the original GAR-7 challan is only one while the duty payment made from the same relates to more than one importer. Due to this, the courier companies have a practice to retain the original copy with it and only the attested photocopy is being given to all the importers. It is because of this reason that the appellant are unable to provide the original copy of GAR-7 challan. Thus in nutshell, the issue pertaining to this case study revolves around admissibility of refund claim on the basis of duplicate GAR-7 challan.

KANSARA MODLER LIMITED V/S DEPUTY COMMISSIONER, AIR CARGO EXPORTS, NEW CUSTOMS HOUSE, NEW-DELHI
[ORDER IN ORIGINAL – 204/2013 DATED 15.10.2013]

Relevant Legal Provisions:

Issue Involved:

The following issue was involved in this case before the adjudicating authority:-
Whether submission of duplicate copy of GAR-7 challan due to procedural lapses can be the reason for denial of refund claim when substantive formalities have been complied?

Brief Facts:

1)            M/s Kansara Modler Ltd. are leading manufacturers of Precision Rollers for bearings. They are registered with the Central Excise Department with the registration no. AAACK090KXM001 for the manufacture of Taper Rollers for bearings falling under chapter sub heading no. 84829130 of the schedule to the Central Excise Tariff Act, 1985. They have imported Measuring Device for Bearings and Components under chapter sub-heading no. 90318038 and Parts Measuring Devices for Bearings and Components under Chapter sub-heading no. 90319085. However, out of the imported items, Master Tester Part of MWA 100C Machine was sent back to the seller for calibration facility as no calibration facility was available in India of the said imported item.

·         The said Master Tester Part was re-imported vide Bill of Entry no. 491274 dt 08.07.2012 but during the course of import it was found that the re-imported goods are second-hand and re-calibrated measuring instrument parts and are restricted in terms of Para 2.17 of Foreign Trade Policy 2009-2014 and so required a valid import license for the clearance of the goods. As the appellant could not produce a valid import license for the clearance of the said goods, it was alleged that the appellant have mis-declared the value of the goods to evade customs duty to the tune of Rs. 27,886/-. Consequently the order was passed confirming redemption fine of Rs. 80,000/- and penalty under section 112 (a) of the Customs Act, 1962 of Rs. 40,000/-.
·         Aggrieved by the order, the appellant preferred an appeal to the Commissioner Appeals

Assessee’s Contention: -The following submissions were made before the adjudicating authority by the assessee-

(1)      In the case of MANGALORE CHEMICALS & FERTILIZERS LTD. Versus DEPUTY      COMMISSIONER [1991 (55) E.L.T. 437 (S.C.)]that the procedural conditions should not be so rigidly interpreted that they deny the intended benefit to the beneficiaries. Similar decision was given in the following cases:-

·         M/s Tablets India Limited v/s Joint Secretary Ministry of Finance [2010-TIOL-652-HC-MAD-CX]:-

Central Excise – Export – Rebate – When factum of export id not doubted, rebate cannot be denied even if all the conditions of the notification are not complied with.

·         M/s Madhav Steel v/s UOI [2010-TIOL-575-HC-MUM-CX]:-

Central Excise – Rebate claim – benefit should not be denied on technical grounds: The Respondent No. 2 has, therefore, erred in concluding that the Petitioners could not prove beyond doubt that the goods cleared on the payment of duty for home consumption, were subsequently exported through shipping bills mentioned in the Order in Appeal dated 22^nd December 2004. As held by the Supreme Court in its decision in the case of Mangalore Chemicals and Fertilisers Limited [2002-TIOL-234-SC-CX], technicalities attendant upon a statutory procedure should be cut down especially, where such technicalities are not essential for the fulfillment of the legislative purpose. The Supreme Court has again held in the case of Formika India v/s Collector of Central Excise [2002-TIOL-599-SC-CX] that the benefit should not be denied on technical grounds: BOMBAY HIGH COURT;
·         FORMICA INDIA DIVISION VSCOLLECTOR OF CENTRAL EXCISE. [1995 (77) E.L.T. 511 (S.C.)]
Demand consequent upon rejection of claim for non-dutiability - Benefit of exemption notification if any, to be given - Exemption/Set-off of duty subject to following Rule 56A procedure (proforma gate procedure) - Assessee contesting dutiability of the goods produced at intermediate stage and consumed captively - Tribunal holding the assessee liable to pay duty on intermediate goods - Assessee’s claim for benefit of Notification No. 71/71-C.E. turned down on technical ground of non-compliance with the procedure of Rule 56A - Appellate Tribunal order set aside as benefit of Notification No. 71/71-C.E. cannot be denied on technical ground of non-compliance with Rule 56A procedure when the assessee contested the correctness of the classification and dutiability of the intermediate product, thus they could not have ordinarily complied with the procedure of Rule 56A - Sections 5A and 11A of the Central Excises and Salt Act, 1944.

·         Modern Process Printers [2006 (204) E.L.T. 632 (G.O.I.)]:-

“EXIM - Rebate - Procedural infractions of notification/circular are to condoned if export have taken place actually and substantive benefit should not be denied.”
·         FORD INDIA PVT. LTD. Versus ASSISTANT COMMR. OF C. EX., CHENNAI [2011 (272) E.L.T. 353 (Mad.)]
Rebate claim - Limitation - Inputs cleared as such for export - Claim filed within one year of export but duty paid subsequently - HELD : Rebate claim cannot be denied on technicality - Rule 18 of Central Excise Rules, 2002 - Section 11B of Central Excise Act, 1944. [para 37]
Rebate claim - Procedural requirements - Substantive compliance is sufficient where factum of export is not in doubt - Rebate being a beneficial scheme, it should be interpreted liberally - Rule 18 of Central Excise Rules, 2002. [para 30]

In the above decisions, it was ruled that the procedural lapses should be the reason to deny the rebate/refund claim where the substantial conditions are satisfied. In the instant case, the substantial conditions of re-import of goods sent for calibration and rightful claim of refund is not disputed, but the refund has been rejected merely on account of technical lapse of not submitting the original copy of challan evidencing payment of redemption fine and penalty. However, it is also undisputed fact that the redemption fine and penalty have been paid by the appellant. Therefore, the benefit of above decisions is squarely applicable in the present case and alleged procedural lapse of not submitted the original challan for evidencing payment of redemption fine and penalty should be condoned as the substantial conditions for filing the refund claim stands satisfied by the appellant. The impugned order in original rejecting the refund claim filed by the appellant should be quashed and the appeal should be allowed.

Reasoning of the Adjudicating Authority:- The Assistant commissioner viewed that the contention of the assessee was considerable as the said courier bill of entry was filed by M/s DHL Express India Pvt. Ltd. representing as agent on behalf of the importer as the impugned goods were imported through courier mode; hence the attested photocopies of the said TR-6 challans by the said courier agency ought to have been considered in lieu of original document, as the said documents in original are never given to the importer. Hence, the issue of requirement of original TR-6 challans can be dispensed with when the claim is supported by the attested copies by the courier agency along with requisite documents.
It was also found that the case laws cited by the assessee in their reply were very much relevant in the present case and so the rebate claim was allowable to them
In view of the above discussion and findings, rebate claim was availed.

Order of Commissioner of Customs: -
The Assistant Commissioner accepted the contentions made by the assessee was sustainable and dropped the proceedings initiated against them by the issuance of show cause notice.

Decision:- Refund application is restored for scrutiny and disposal as per law and appeal disposed of.

Conclusion: -The gist of this case is that submission of duplicate copy of GAR-7 challan due to procedural lapses cannot be the reason for denial of refund claim when substantive formalities have been complied

***********

Comments

PJ/Case Study/2014-15/99
10 January 2015

Post a Comment

Query