TMI Blog2014 (11) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... e refund of the balance amount of ₹ 10,63,065/- as for refund of Additional Customs Duty & SAD of ₹ 25,28,755/- the Cenvat Credit of this amount taken would have to be reversed which has not been reversed. Department does not dispute the cost data about the cost of manufacture of CD Deck Mechanism and average selling price of CD Deck Mechanism during July 03 to Sept. 03 period and Oct. 03 to March 04 period. From the fact that during 2003-04 the Appellant Company made the profit of about ₹ 6 Lakh it cannot be concluded that they had not sold CD Deck Mechanism during Oct. 03 to March 04 period at a loss. Looking to the facts of this case I am of the view that there is no reason to disbelieve the appellant’s contention backed by C.A. Certificate and cost data that incidence of customs duty whose refund is being claimed was not passed on by them to the customers - refund claim of only basic customs duty of ₹ 10,63,065/- would be available to the appellant, as the balance amount of ₹ 25,28,755/- represents additional customs duty/SAD whose Cenvat Credit has been taken by the appellant. Refund of ₹ 10,63,065 is allowed to the appellant by holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Departmental Representative to produce the original clearance documents to see whether the claim of the importer that they have claimed the benefit of Notification No. 25/99 and the payment of higher duty was under protest. The original documents produced by the DR indicated the following remarks: Sir, Party has produce the Central Excise Certificate For the Benefit against Ntfn.No. 25/99. However the Benefit of ntfn Not given to Party. Therefore Party is paying Full duty under PROTEST. Therefore, we are of the view that the duty has been paid by the importer under protest. 4. In view of the above, there is no dispute on merits of the case that importer was entitled to the benefit of notification and was entitled to duty free clearance. However, they paid the duty under protest for clearance of the goods. The claim for refund of duty paid by the appellant under protest stand rejected by the lower authorities on the ground of unjust enrichment. As such, the only issue required to be decided in the present appeal is as to whether the appellants have collected this extra duty from their customers and has to be hit by provisions of unjust enrichment or they themselves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... margin of 15.55% on its sales value. 2. That during Oct2003 to March2004, the firm had imported CD Pick up Lense Unit at full rate of duty of 25%+16%+4% under protest since Concessional rate of duty was denied to the firm vide B/E No. 366460 dated 30.09.2003, 367750, dated 29.10.2003, 368048 dated 04.11.2003, 368835 dated 18.11.2003, 369273 dated 25.11.2003, 369869 dated 05.12.2003 and 371187 dated 30.12.2003. The cost of pick up lense unit works out to be ₹ 123/- per piece as detailed in enclosed chart. The average basic selling price per piece of CD Deck Mechanism during this period was ₹ 114.40, which was less than the cost of manufacturing. 3. That as per above we conclude and certify that the impact of higher rate of duty paid by the party under protest on the above seven Bills of Entries have not been passed on to any other party and have been fully borne by the firm itself. 7. As is seen from the above, Chartered Accountant has gone to the cost of per piece of their final product which comes to around ₹ 123/- per piece whereas the appellant was selling their CD mechanism during the relevant period at ₹ 114.40 . The lower authorities have ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in their balance sheet nor they have brought any other documents to show that duty was not passed on to their customers. We note that an identical reason was advanced by the Revenue before the Tribunal, in the case of Infar India Ltd. vs. Commissioner of Customss, New Delhi [2002 (150) ELT 411 (Tri-Delhi) wherein it was held by the Tribunal as under:- The appellants have filed the certificates from the Chartered Accountant certifying that the customs duty element is not passed on to the customers. None of the authorities below have found anything wanting in these certificates. The observation of the lower authorities that the company in their balance sheet for the years 1995-96 did not indicate ₹ 94,86,522/- as outstanding recoverable from customs on account of excess duty as they were contesting the same with the department and therefore it can safely be concluded that they have included the said excess duty amount in their costing and passed on the burden of said duty to third party is subjective, arbitrary and unreasonable. At that time, the company was still contesting the levy of customs duty on the product imported by them in an appeal before the CE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umption and presumptions. For the same reasons, the argument of the learned DR that no businessman sells the goods at a price less than the cost price cannot be appreciated inasmuch as it is an general statement or impression. Such an information must come from records of the assessee to establish that the sale price was either equivalent to the cost price or was more than that so as to establish that duty difference stand recovered from the buyers. Revenue has not disputed the fact that during the relevant period the sale price of the goods was ₹ 114/- per piece as per the certificate given by the Chartered Accountant. Whereas the cost price was ₹ 123. If that be so, the said certificate cannot be taken lightly and ignored on the basis of general business practice. 13.In the case of Collector of Central Excise, vs. Metro Tyres Ltd. [1995 (80) ELT 410 (Tri), it was held that even though the assessee issued composite invoices not showing the duty element separately but such sale price of the goods before as well as after the event remained the same and even when price increased, the same went up by an amount much less than the amount of duty /differential duty, it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut included duty element according to own averment of the appellant and data submitted by the Chartered accountant, that formed part of the cost of the finished goods and such cost recovered by the appellant. Accordingly, it grant of refund is made it will unjustly enrich the appellant. Learned authority was also of the opinion that the plea of sale of finished goods at loss has no force because the landed cost of input including duty formed part of total cost of the finished gods. Further, the duty recoverable from the department did not appear in the Balance Sheet of the appellant as on 31.03.2004. No evidence was also produced before Commssioner(Appeals) to show that the duty paid on input was not passed on to buyers of the finished goods. Accordingly, the appellant failed to succeed in its appeal before Commissioner (Appeals). 18. It is an admitted fact that the impugned duty element of ₹ 10,63,065/- (which was denied to be refunded) became landing cost of the input imported in 2003-04 and detailed batch costing sheet was not produced before any of the authorities below to satisfy that the inputs imported in the month of September, October, November and December 2003 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tomers, such a claim cannot be accepted. Further Section 28C and D of the Act provide for price of goods to indicate the amount of duty paid thereon and presumption that incidence of duty has been passed on to the buyer. Therefore, until the contrary is proved, there is a presumption provided under the statute that the duty has been passed on to the buyer. The above said provisions would clearly establish the fact that it is for the importer to satisfy the authorities that the duty has not been passed on to the buyer and the excess payment had been made by him by absorbing the same. 8. In the present case on hand, admittedly, the first respondent has not produced any document other than the certificate issued by the Chartered Accountant to substantiate its case. The certificate issued by the Chartered Accountant is merely a piece of evidence acknowledging certain facts. The authorities cannot merely act upon the certificate. If such an interpretation is given, then there is no need for authorities to decide the issue of refund. In other words, the certificate issued by the Chartered Accountant would prevail over the consideration of the issues before the authorities. Such a situ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reveal that the appellant did not lay any evidence before the adjudicating or first appellate authority to come out of the rigor of unjust enrichment as laid down in Section 27 of Customs Act 1962, it does not deserve any consideration at this stage because allowing the refund of ₹ 10,63,065/- (which was denied to be refunded in adjudication)would unjustly enrich the appellant at the cost of revenue. 22. Explaining doctrine of unjust enrichment, Hon ble Supreme Court in the case of Sahakari Khand Udyog Mandal limited V. CCEC - 2005 (81) ELT 328 (SC) has been held as under: 31. Stated simply, Unjust enrichment means retention of a benefit by a person that is unjust or inequitable. Unjust enrichment occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else. 32. The doctrine of unjust enrichment , therefore, is that no person can be allowed to enrich inequitably at the expense of another. A right of recovery under the doctrine of unjust enrichment arises where retention of a benefit is considered contrary to justice or against equity. 33. The juristic basis of the obligation is not founded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the levy is in relation to or in connection with the manufacture or production of goods, it may be levied even at a point later than manufacture or production of the goods.) The duty levied will from part of the total cost of manufacturer or producer. The levy being a component of the price for which the goods are sold, is ordinarily passed on to the customer. It is a matter of common knowledge that every prudent businessman will adjust his affairs in his best interests and pass on the duty levied or leviable on the commodity to the consumer. That is the presumption in law [Emphasis supplied]. 24. Law requires that no one can be enriched at the cost of the other for which refund claimed under Customs Act, 1962 has to undergo test of unjust enrichment. Such principle was followed by Honble Supreme Court in the case of Union of India vs. Solar Pesticide Pvt. Ltd. reported in 2000 (116) ELT 401 (SC) held as under: The use of the words 'incidence of such duty... is significant. The words 'incidence of such duty' mean the burden of duty. Section 27(1) of the Act talks of the incidence of duty being passed on and not the duty as such being passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty which is uniformly levied on all manufacturers of similar goods but for other reasons' [Emphasis supplied]. The original adjudicating authority deducted an amount of ₹ 25,28,755.60/- from the refund claim of ₹ 35,91,820 which had been availed as Cenvat by the appellant. The balance amount was credited by him to the welfare fund as according to him, appellant failed to prove that the same has not been passed onto any other person. Following, Apex Court judgement in M/s Mafatlal Industries, I am of the view that the fluctuation in selling price can also be on account of increase or reduction of 'Profit margin' and fluctuation is sale price is not necessarily an indicative factor for deciding the question of unjust enrichment as laid down by Apex Court in UOI Vs. Solar Pesticides. The CA certificate alone cannot be a conclusive proof of the fact that duty incidence has not been passed. Section 28C and 28D of Customs Act read as follows: 28C. Price of goods to indicate the amount of duty paid thereon. - Notwithstanding anything contained in this Act or any other law for the time being in force, every person who is liable to pay duty on any go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture of CD Deck mechanisms and accordingly the appellant claimed concessional rate of duty of 5% basic customs duty Plus 16% additional customs duty and 4% special additional customs duty (SAD) in terms of Notification No. 25/99-CUS dt. 28.02.99. Normal rate of basic customs duty on these goods is 25% adv. The Jurisdictional Assistant Commissioner of Customs did not accept the appellants claim for exemption under Notification No. 25/99-CUS as a result of which the Appellant higher paid duty under protest. The excess duty paid under protest was ₹ 35,91,280/-. The appellant, thereafter, filed an application under section 27 of Customs Act, 1962 for refund of excess duty amounting to ₹ 35,95,820/- paid by them under protest. The refund claim was filed on the ground that the CD pick up Lense Units imported by them under seven bills of entry as mentioned above were eligible for Notification No. 25/99-CUS dt. 25.02.99, as the items were part of CD deck mechanisms and had been used for this purpose. The refund claim was rejected by Assistant Commissioner vide Order-in-Original dt. 22.06.06 on the ground that the goods imported are not covered for exemption under Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs, New Delhi is legal and is based on facts. Against this order of the Commissioner (Appeals) this appeal has been filed. 28. The appeal was heard on 06.06.2013. Hon ble M(J) in her order dt.13.06.13 held that refund claim is not hit by the bar of unjust enrichment in as much as the price of goods before as well as during the period in which duty was paid on higher rate, remained the same and even when the price increased, the same went up by amount much less than the amount of duty/differential duty and from this it has to be concluded that the Appellant has not passed on the incidence of duty paid by them whose refund is being claimed. However, Honble M(T) in a separate order dt.26.09.13 recorded by him, held that refund claim is hit by the bar of unjust enrichment and accordingly he rejected the appeal. Member (T) in his order observed that the Appellant s claim that they had sold goods at loss is not believable as profit and loss account for the year ending 31.03.2004 shows profit of ₹ 6,10,435.95 for the financial year 2003-2004 which would not be possible if the goods had been sold at a loss. 29.On account of difference of opinion between M(J) and M(T) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctical and adopt a realistic approach and not be oblivious as to the nature and character of proof which would be available, that Hon ble Gujarat High Court in the case of Dhariwal Industries Ltd. Vs. Commissioner of Central Excise Customs reported in 2014(303) ELT-496 (Guj.) has after discussing the Apex Court s judgment in the case of Allied Photographics India Ltd. reported in 2004(166) ELT-3(SC) has held that as held by the Apex Court in this case, the fact that despite increase in excise duty and corresponding increase in additional duties, the goods were sold by assessee to the consumers exactly at same price as the price at which the same were being sold during prior to the payment of duty at higher rate, would not lead to conclusion that the additional burden of duty was not passed on to the consumers by the assessee, and that in such a case, it would be still open for the Department to apply the principle of unjust enrichment, if it is found that sale price of the goods remained the same before and after collection of duty at higher rate of duty due to some other reasons, such as reduction of price of raw-material or some factor completely un-related to the assessee abso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot passed on to customers, that appeal filed by the Govt. against this order of the Tribunal was dismissed by the Apex Court by judgment reported in 2002(14) ELT-A75(SC) and therefore this judgment of the Tribunal, which has been affirmed by the Apex Court, becomes the binding precedent, that Apex Court in the case of Commissioner of Customs, New Delhi Vs. Organan (India) Ltd. reported in 2008(23) ELT-201 (SC) has upheld the Tribunals order holding that when the duty was paid under protest and the auditors certified that the incidence of duty whose refund is claimed was not passed on to the customers, the refund cannot be refused on the basis of unjust enrichment, and that in view of the above submissions, it is the order recorded by the Hon ble Member(Judicial) which is correct. 32. Mrs. Ranjana Jha, Ld. Jt. CDR, supporting the view recorded by the Hon ble Member(Technical), pleaded that from the fact that the average sale price of CD Deck Mechanism during Oct. 03 to March 04 was less than the average Units price of CD Deck Mechanism during the period from March 03 to Sept. 03, it cannot be concluded that incidence of higher duty during post Sept.03 period was not passed on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal claim of ₹ 25,98,820/- represents the additional customs duty and special additional customs duty whose Cenvat Credit has been availed. The appellant, therefore, are eligible only for the refund of the balance amount of ₹ 10,63,065/- as for refund of Additional Customs Duty SAD of ₹ 25,28,755/- the Cenvat Credit of this amount taken would have to be reversed which has not been reversed. The question thus is as to whether the balance amount of ₹ 10,63,065/- is refundable and for this purpose the question to be decided as to whether it is hit by the bar of unjust enrichment. The appellant in this regard have produced cost data of cost price of CD Deck Mechanism being manufactured by them during July03 to Sept.03 period when they were importing the CD Pick Up Lense Units the main component of CD Deck Mechanism at the concessional rate of 5% basic customs duty plus 16% additional customs duty plus 4% special additional customs duty (SAD) and also the cost data, for the period from Oct. 03 to March04 when the CD Pick Up Lense Units were being imported on the full rate of duty of 20% basic customs duty plus 16% additional customs duty plus 4% special a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd character of proof which will be available and that denial of refund claim is not fair, just and equitable in absence of any negative factor or evidence to the contrary to disbelieve the appellant s contention. The Apex Court s judgment in case of Allied Photographics India Ltd. (Supra) cited by the Department does not say that the fact that the goods were sold by the assessee to the consumers exactly at the same time as the price at which they were being sold during the period prior to the event of reclassification, revaluation etc. resulting in payment of higher quantum of duty, by itself, would not be conclusive that the additional burden of duty was not passed on to the consumers by the assessee. What its says is that in such a situation, the determinative factor would be whether the sale price of the goods remained the same inspite of payment of higher duty on raw material due to some other reasons, such as reduction in the price of raw materials or some other factors completely unrelated to the assessee absorbing the impact of higher rate of duty. 35. In this case, the Department does not dispute the cost data about the cost of manufacture of CD Deck Mechanism and avera ..... X X X X Extracts X X X X X X X X Extracts X X X X
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