Facts of the Case

The appellant, the Principal Commissioner of Customs, Hyderabad, filed this appeal under Section 130 of the Customs Act, 1962, against a final order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad, dated 05.11.2018, in favour of the respondent, M/s. OSI Systems Private Limited. The Tribunal had upheld the respondent's entitlement to a refund under Customs Notification No. 102/2007, concerning goods that were cleared on payment of the applicable rate of VAT. The Department's core grievance was that the Tribunal had not considered the Supreme Court's decision in Collector of Central Excise, Vadodara v. Dhiren Chemical Industries when confirming the refund order passed by the original adjudicating authority.

Issues Involved

  1. Whether a CESTAT refund under Notification 102/2007 (Customs), for goods cleared on payment of VAT, was correctly allowed.
  2. Whether the Tribunal erred by not considering the Supreme Court's ruling in Dhiren Chemical Industries.

Petitioner's Arguments

  • The Tribunal, in confirming the original authority's order, had failed to take into account the Supreme Court's judgment in Dhiren Chemical Industries.

Respondent's Arguments

The order does not separately record the respondent's arguments, as the appeal proceeded to be examined only on the Department's own pleadings and the Tribunal's reasoning.

Court Order / Findings

  • The Court noted that the Tribunal, in reaching its decision, had itself relied upon two of its own recent rulings — Guzal Overseas v. Commissioner of Customs, New Delhi and Malhotra Imports and Exports Corporation v. Commissioner of Customs, Chennai — both of which had, in turn, considered and applied Dhiren Chemical Industries.
  • Since neither of these Tribunal precedents had been shown to have been set aside or held bad in law by any higher forum, and the Tribunal had also relied on a relevant CBEC Circular (No. 6 of 2008) consistent with Dhiren Chemical Industries, the Court found no error in the Tribunal's approach.
  • Finding no strong case made out by the Department for interference, the appeal was rejected, with no order as to costs.

Important Clarification

This is a Customs Act ruling concerning a pre-GST refund claim under a Customs notification, unrelated to GST law. It confirms only that a Tribunal decision consistent with its own settled precedent line (itself grounded in binding Supreme Court authority) will not be disturbed absent a stronger showing of error by the Revenue.

Sections Involved

  • Section 130, Customs Act, 1962
  • Notification No. 102/2007-Customs

Decision – In Favour of

Decided against the Department; the appeal was rejected and the Tribunal's order allowing the refund was upheld. No GST issue was involved.

Case Details

  • Court: High Court for the State of Telangana at Hyderabad
  • Case No.: Central Excise Appeal No. 37 of 2019
  • Coram: Hon'ble Sri Justice P. Sam Koshy and Hon'ble Sri Justice Laxmi Narayana Alishetty
  • Date of Judgment: 1 September 2023

Link to Download the Order

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