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2005 (12) TMI 569 - HC - CustomsRefund claim - duty paid on capital goods and inputs - Imports plant and equipment known as Steam Tube Dryer (machinery/plant) from Germany for upgrading its existing plant - HELD THAT:- Once the bank guarantee has been invoked and encashed, the amount partakes the character of duty paid and thereafter, even when an assessee succeeds ultimately, the claim of refund will be for refund of duty paid. The claimant has to comply with the conditions of the provisions pertaining to refund, namely, Section 11B of the Central Excise Act, 1944 and Section 27 of the Customs Act, 1962. During the course of hearing, it was submitted on behalf of the petitioner that even if such an incidence of duty might form part of the cost price, unless and until it goes in as a part of the sale price, the doctrine of unjust enrichment cannot be invoked against the petitioner. This contention is based on the plea that the sale price which existed prior to putting the plant and machinery to use continued in relation to the manufactured products after the plant and machinery was put to use and therefore, in absence of any difference in the sale price at different points of time, a presumption should be raised that "incidence of duty" had not been passed on. The entire premise on which the submission is built is fallacious. In the first instance, it is the case of petitioner itself, that it had imported the plant in question so as to replace and upgrade its existing plant and machinery. This would indicate that the cost of user of the old plant and machinery was such that a particular sale price had to be fixed. As against that, when new plant and machinery are installed and put to use, the manufacturing cost is bound to come down, which would leave enough margin to the manufacturer to retain the sale price at the same level. This could be only one instance why the sale price has remained constant. There could be various other factors, and such factors are within the knowledge of the petitioner. The petitioner is, therefore, duty bound to place on record the relevant material in this regard and discharge the onus which has been cast on the person making a claim to establish that the "incidence of duty" has not been passed on. The contention that merely because the sale price might be such that, due to market factors, an assessee may incur losses would not necessarily reflect that the incidence of duty has not been passed on. May be, in a given case, only a proportionate part may be passed on in such circumstance. Ultimately, it would be a question of fact and evidence will have to be led in this context. In the case of the petitioner, both the adjudicating authority and the appellate authority have come to the conclusion that the petitioner has not been able to establish that incidence of duty had not been passed on. This is a finding of fact and it is not possible for this Court in these proceedings to take a different view of the matter. In principle, the contention that in case of capital goods, the incidence of duty can never be passed on, cannot be accepted for the reasons mentioned hereinbefore. Thus, the claim of the petitioner regarding balance amount of ₹ 23,98,176/- is concerned, it is not possible to find any infirmity in the impugned order of Commissioner (Appeals). The petition therefore, partly allowed to the extent of claim of ₹ 17,50,000/-, and rejected insofar as the claim of ₹ 23,98,176/- is concerned. The amount of ₹ 17,50,000/- to be refunded by the respondent authorities within a period of twelve weeks from today. The claim as to interest cannot be accepted for the simple reason that the principal claim having been rejected in absence of any entitlement to refund of ₹ 23,98,176/-, there would be no question of granting any interest.
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