TMI Blog2015 (4) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... no evidentiary value whatsoever and at best, it can be taken as merely inferential. If the duty incidence had not been passed on, the same should have been recorded as amounts due from the customs department in the receivables account. It is an admitted position that the records maintained did not reflect the duty paid on the raw materials as the amount due/receivable from the department. In the absence of such an evidence, an inference drawn by the Cost Accountant cannot be said to be reasonable rebuttal of the statutory presumption of passing on of the duty incidence. Whenever a question of fact is to be proved, the same has to be established by following the process known to law. I do not find any such establishment of fact by the appellant in the present case. - appellant has not discharged the statutory obligation cast on him of rebutting the presumption of unjust enrichment in any satisfactory manner acceptable to law. In this view of the matter, I agree with Hon'ble Member (Technical) that the appellant has not crossed the bar of unjust enrichment and therefore, not eligible for the refund. - Decided against assessee. - Appeal No. C/268, 269/11 - Mum - - - Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led a curative petition which was also dismissed on 26.11.2008. 2.3 Pursuant to the decision of the Hon'ble Apex Court dated 29.09.2006, on 01.12.2006, the appellant filed a refund claim of ₹ 4,32,03,516/- and ₹ 2,86,47,254/- seeking refund of amounts paid towards customs duty on barge and stevedoring charges. Thereafter, a show-cause notice was issued to the appellant on 12.05.2009 wherein the amount of refund was calculated to ₹ 6,44,96,857/- against the amount claimed by the appellant and also to show cause why not the said refund claim not to be sanctioned in accordance with the provisions of Section 27(2) of the Customs Act, 1962. The said show-cause notice was replied by the appellant and submits that as this refund claim pertains to the period from 1994-95 to 2005-06 therefore, the provisions of bar of unjust enrichment are not applicable for the period prior to 13.07.2006. It is also submitted that the selling price were market driven and therefore as per the decision in the case of Hindustan Copper Ltd. 1998 (9) SCC 708, the appellant is entitled for refund claim. It is further submitted that the appellant has produced certificate issued by the Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund and issue of bar of unjust enrichment were raised. The appellant has not contested the issue of quantum of refund but contested the issue of bar of unjust enrichment, the Adjudicating Authority considering the submissions of the appellant on the issue, sanctioned the refund claim. 5. The order of the Adjudicating Authority could have to be reviewed only to the extent of issues raised in the show-cause notice and with regard to the legality of the adjudication order. He further submits that in terms of Section 129D of the Customs Act, 1962, the ld. Commissioner could have reviewed on his own motion called for and examined the record on any proceedings in which any Adjudicating Authority subordinate to him has passed any decision or therefore under the Customs Act, 1962 for the purpose of satisfying himself as to the legality and propriety of the order and could direct such authority to apply to the Commissioner (Appeals) for determination of such points arising out of the decision or order as may be specified by the Commissioner in his order. Therefore, the Commissioner could have ordered review to such point which arose from the decision or order by the Adjudicating Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en cancelled, therefore, it cannot be concluded that the assessment has been made finalised. 10. It has also taken a ground that the imports made in 1998 there are terms of imports are other than the imports made earlier. In fact the revenue has not produced any contrary evidence in support of their claim. 11. With regard to the issue of limitation, it is further submitted that as the duty was paid under protest, therefore it cannot be held that the refund claims were barred by limitation. In these terms, it is submitted that as the appellant has discharged their burden of unjust enrichment as submitted hereinabove, therefore, impugned orders are required to be set aside. 12. On the other hand, the ld. AR opposed the contention of the ld. counsel and submits that the impugned proceedings are in continuation of the proceedings of the issue whether the appellant are required to pay duty or not. Therefore, issue was alive since duty was paid under protest and Proceedings' have been defined by this Tribunal in the case of Metro Exporters 1998 (37) ELT 610. Therefore, the refund claim filed by the appellant are in continuation of the issue whether they are liable to pay du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unjust enrichment. Therefore, as per the show-cause notice, the quantum of refund claim was disputed and the issue of bar of unjust enrichment was raised. The appellant has not disputed the quantum of refund claim; therefore the said issue rests there itself. On the issue of unjust enrichment, the appellant has submitted that as the selling price was market driven, therefore the same was not in their control and in the case of Hindustan Copper Ltd. (supra) the Hon'ble Apex Court has held that in case of selling price being market driven, the bar of unjust enrichment is not applicable. We further find that the appellant has contended that they are operating in losses i.e. the selling price is less than the cost of production to that effect they have produced certificate issued by the Chartered Accountant as well as Cost Accountant. In that circumstances, bar of unjust enrichment have been passed by the appellant as held by the Hon'ble Apex Court in the case of Living Media Industries Ltd. (supra). 15. In these circumstances, we hold that the appellant has passed the bar of unjust enrichment. 16. But, the revenue has preferred to litigate the matter on the other ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nate classification under Heading 84.15 of the Schedule to the CETA, 1985. On the other hand, the review order against the order of the Assistant Collector who dropped the proceedings and accepted the classification of the product under Chapter Heading 8418, alleges as under: 1. As per information received from the Central Economic Intelligence Bureau, it is learnt that the manufacturer of airconditioning equipment are clearing chiller package unit as heat pumps, whereas logically such equipments should be classified under 84.15 and attract duty @ 30%. Instead the manufacturers of such chiller units are misclassifying them under 84.18 and paying duty @18%. 2. Further, as per C.E.I.B. reports, the chiller packages units, which are used for heating, ventilation and airconditioning application are primarily airconditioning machine parts falling under chapter heading 84.15 which read as airconditioning machines, comprising a motor driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated are being wrongly classified as head pumps of Tariff No. 84.18 which is read as Refrigerator, freezer and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h an adjudicating authority subordinate to him has passed any decision or order under this Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and may, by order, direct such authority to apply to the Commissioner (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Commissioner of Central Excise in his order. It is thus clear that the review order should be based upon points arising out of the decision or order of the subordinate adjudicating authority and cannot raise fresh or new grounds. This is the view taken by the Tribunal in several decisions, among them being the decision in the case of Collector of Central Excise v. Sunita Textiles reported in 1993 (67) E.L.T. 932; 1993 (69) E.L.T. 144, in case of Extrusion Processors v. Collector of Central Excise ; 1999 (107) E.L.T. 208 (T) = 1998 (29) RLT 132 in the case of Collector of Central Excise v. Eastern Aeromatics and 1999 (107) E.L.T. 533 (T) = 1998 (29) RLT 710 in the case of Collector of Central Excise, Hyderabad v. Swastic Coaters . 4 . In the light of the above decisions, we hold that the revisionary authority h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we hold that appellant have passed the bar of unjust enrichment. Accordingly, the impugned orders deserve no merits, hence same are set aside; the appeals are allowed with consequential relief. (Pronounced in Court on .......................) Per : P.K. Jain 22. I have gone through the order recorded by the ld. Brother. However, my views are different and are at variance and therefore, I am recording a separate order. 23. The facts of the case have been mentioned in brief by my ld. Brother; I would not be repeating the same. However, certain other facts would be added as and when required. 24. In the present case a refund claim was filed by the respondent under Section 27 of the Customs Act,1962, and after following the due process, the Asst. Commissioner sanctioned the substantial part (which was acceptable to appellants) of the refund claim and was paid to the appellant. The Commissioner in exercise of the powers under Section 129D(2) examined the records of the said proceedings to satisfy himself as to the legality or propriety of the said decision and directed the Asst. Commissioner to apply to the Commissioner (Appeals) for determination of certain specified p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t may furnish to establish that the amount of duty and interest, if any, paid on such duty in relation to which such refund is claimed was collected from, or paid by him and the incidence of such [duty and interest, if any, paid on such duty had not been passed on by him to any other person; Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section and the same shall be dealt with in accordance with the provisions of sub-section (2): Provided further that the limitation of one year or six months, as the case may be, shall not apply where any duty and interest, if any, paid on such duty has been paid under protest. Provided also that in the case of goods which are exempt from payment of duty by a special order issued under sub-section (2) of section 25, the limitation of one year or six months, as the case may be shall be computed from the date of issue of such order. Explanation.- For the purposes of this sub-section, the date of payment of duty and interest if any, paid on such duty , in relation to a person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied, the whole or part of claim is refundable, the Asst. Commissioner is required to make an order and credit the said amount to the Consumer Welfare Fund; and in case the applicant is able to satisfy the conditions laid down in proviso to sub-section (2) of Section 27 the said amount is paid to the applicant. It would thus be seen that in case of refund claim the proceedings starts from the time the refund claim is lodged with the Asst. Commissioner of Customs. It is also to be seen that the said Section does not stipulate issuance of any show-cause notice or any other notice before passing the order on the refund claim whether in part or full. In fact in large number of cases, where the refund claims are in order to the satisfaction of Asstt. Commissioner of Customs, the same are paid to the applicant without issuance of any show-cause notice or any other notice. Even though the section does not provide for issuance of any show-cause notice or any other notice, in practice wherever the Asst. Commissioner is not sanctioning the whole of the amount as claimed by the applicant, a show-cause notice is generally issued detailing the reasons and after getting a reply and hearing the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice by the proper officer, while, in the case of refund it is the filing of the refund claim by the applicant to the Asst. Commissioner of Customs. 30. My Ld. Brother has quoted the judgment of Carrier Aircon Ltd. (supra). I have gone through the judgment. The said judgment is relating to the recovery of duty consequent to the proposal for reclassification of the goods and is not relating to the refund claim. Similar is the position in the other case law quoted viz. that of Eastern Aeromatics P. Ltd. (supra). Here again the issue was classification of the product Resinoid and hence rate of duty and recovery of duty. Here again the proceedings start with the serving of the show-cause notice. In view of the said position, the two case laws quoted by my ld. Brother are not applicable to the cases of refund claim where the proceedings starts with the filing of the refund claim and there is no requirement under the law for issuance of any show-cause notice as against the statutory point and requirement of show-cause notice under Section 28 of the Customs Act, 1962. 31. My ld. Brother has observed that the appellant has filed the refund claim in pursuant to the direction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that in case of selling price being market driven, the bar of unjust enrichment is not applicable. 34. I have gone through the case of Hindustan Copper Ltd. (supra). In the said case, Hindustan Copper Ltd. has paid certain state excise duty on the rectified spirit and they have claimed that the State legislature was not competent to impose excise duty on rectified spirit since it is not fit for human consumption. The Hon'ble High Court has upheld the said view and directed the refund of excise duty paid as the State was not competent to levy the same. Thereafter the issue of unjust enrichment was taken up and in that context an affidavit was filed on behalf of Hindustan Copper Ltd. and the Hon'ble Apex Court observed as under:- 2. On the question of refund, an affidavit of Shri Prashant Swarup, authorised representative of the respondent, has bene filed wherein it has been stated that there is no question of any unjust enrichment of the respondent as a result of the refund of the excise duty paid on rectified spirit because the respondent has not passed on the duty to any consumer of the final product, viz., copper, manufactured by the respondent. It has been state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chment if the importer/seller is then able to get refund of the duty paid from the Government notwithstanding the incidence of tax having already been passed on to the purchaser. 21. Learned Counsel for the respondent had also contended that in cases of captive consumption of imported goods, it would be impossible for the assessee to establish whether the duty component has been passed on to the buyers of the finished products or has been borne by the importer himself. Difficulty in proving that the incidence of the duty borne by the importer has not been passed on to the purchaser of the finished product can be no ground for interpreting Section 27 differently. It is not possible that in no case will an importer not be able to prove that the incidence of the duty imposed on the imported raw material has not been passed on to any other person. In fact in Civil Appeal No. 4381 of 1999 filed by the Commissioner of Customs against M/s. Surya Roshni Limited, the importer had produced certificate from the Chartered Accountants giving details of costing of the final product and the Commissioner (Appeals) found as a fact that the component of excess customs duty paid on the imported ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med that the duty on the barging and stevedoring charges are insignificant and negligible portion in the cost of production. Secondly, they have claimed that the goods are being sold at the market driven price which varies from day today and is not related to the cost of production. Another point mentioned was they are having operating losses in number of years (in some years, there were operating profits also). The other point advanced by the appellant is that the production of the Chartered accountant and Cost accountant certificate to support the case. As mentioned earlier, in a circumstance, where the duty burden on the barges and stevedoring are negligible and insignificant in the cost of production, and final product is not being sold on the basis of cost of production but market driven, in my view the fact that they were having operating losses etc. is of no consequence and it cannot be concluded that the burden of duty has not been passed on to the consumers. In such circumstances, the criteria to decide whether the burden of duty has been passed on or not will be to see the balance sheet of the relevant years and whether in the balance sheet the said amount is being shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... post 1998. However, the same were not produced by either side. Under the circumstances, in my view, in the interest of justice, it would be necessary to remand the matter to the original authority with the direction that the appellant will produce all the contracts post March 1998 and original authority will examine whether any of these contracts are on different terms and conditions compared to what was discussed by the Hon'ble Supreme Court and whether the changes in the terms of the contracts would make barge charges as part of the assessable value and give the finding on the same. 42. Another issue raised by the revenue is that the Supreme Court decision was relating to barging charges while the refund has been granted not only on the barging charges but also stevedoring charges which was not decided by the Hon'ble Supreme Court in the appeals filed by the appellant. We find merit in the contention of the revenue on this point and also note that the appellants have not disputed the inclusion of stevedoring charges in the assessable value at any point of time. Even when the provisional assessment were finalised, protest was not for inclusion of the stevedoring charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from Hon'ble High Court judgement in the case of CC vs. Hindalco Industries Ltd. reported in 2008 (231) ELT 36 (Guj). First appellate authority on the other hand relied upon Hon'ble Supreme Court judgment in the case of Mafatlal Industries 1997 (89) ELT 247 (SC) and Sahakar Khand Udyog Mandal Ltd. 2005 (181) ELT 328 (SC) as also Hon'ble Bombay High Court judgment in the case of Bussa Overseas Properties P. Ltd. vs. UOI 2003 (158) ELT 135 (Bom) and number of judgments of this Tribunal. 45. The factual matrix in the present case is that consequent to finalisation of provisional assessment, differential duty was paid by the appellant. It may be due to whole of barging and stevedoring chares or due to final figures relating to these charges or due to some other reason. Refunds have not arisen, consequent to the finalisation of provisional assessment but consequent to the decision of the Hon'ble Supreme Court as the assessment were already finalised. In our view, the changes made in the Section18 of the Customs Act, 1962 with effect from 13.07.2006 have no application in these facts. Observation and ratio of the Hon'ble Supreme Court judgment in the case of Maf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, reviewing authority can go into any point which in his view is relevant to the examination of the refund claim and direct such authority to apply for determination of such points under Section 129D(2) and his powers are not limited to the issues raised in the show cause notice as held by Member (Technical). Issuance of show-cause notice or issues raised in the show-cause notice is not a limiting factor under Section 129D(2) as held by Member (Technical). 1.1 I find that this issue has been settled long ago by the decision of this Tribunal in the case of Rosemount (India) Ltd. [1998 (99) ELT 502 (Tri.)] wherein it was held that if no show cause notice is issued under section 11A(1) of the Central Excise Act, 1944, though revision/review proceedings under section 35(E) are taken, notwithstanding the order by the Commissioner (Appeals) under Section 35(E), in the absence of a notice under section 11A for recovery of erroneous refund within the time period prescribed therein, such recovery would hit by time bar. The said decision was rendered after considering two decisions of the Supreme Court on the subject matter in the case of Re-rolling Mills [1997 (94) ELT 8 (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Hon'ble Member (Judicial) has held that the principle of unjust enrichment will not apply in the facts of the present case and the appellant is entitled for the refund relying on the decision of the apex court in the case of Living Media India Ltd. [1998 (104) ELT 3 (SC)]. However, he has overlooked a very important aspect, namely, that in the said case the duty refund arose on account of a settlement between the Union of India and the petitioner. Customs duty was imposed @30% adv. on glazed newsprint which was used in the printing of news magazines. The said levy was challenged by the petitioner on the ground that the said levy adversely affected the fundamental right of freedom of speech and expression guaranteed under Article 19(1)(a) of the Constitution. The Hon'ble Apex Court directed the Union of India to reconsider the levy (which was in force during the period 1-3-1989 to 24-1-1990). Accordingly, it was agreed between the Union of India and the petitioner that the levy during the said period would be reduced to 15% adv. and any duty paid over and above 15% adv. would be refunded to the petitioner and any short levy would be made good by the petitioner. Thus the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision favourable to an assessee/manufacturer, whether on the question of classification, valuation or any other issue, does not automatically entail refund. Section 11B of the Central Excises and Salt Act and Section 27 of the Contract Act, whether before or after 1991 amendment - as interpreted by us herein - make every refund claim subject to proof of not passing-on the burden of duty to others. Even if a suit is filed, the very same condition operates. Similarly, the High Court while examining its jurisdiction under Article 226 - and this Court while acting under Article 32 - would insist upon the said condition being satisfied before ordering refund. Unless the claimant for refund establishes that he has not passed on the burden of duty to another, he would not be entitled to refund, whatever be the proceedings and whichever be the forum. Section 11B/Section 27 are constitutionally valid, as explained by us hereinbefore. They have to be applied and followed implicitly wherever they are applicable. 2.3 The hon'ble High Court of Bombay in the case of United Spirits Ltd. [ 2009 (240) ELT 513 (Bom.)] had an occasion to examine whether the unjust enrichment provisions would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as the decision in the Hindustan Copper case is concerned, the prices were fixed by MMTC, a Govt. of India Corporation who was the canalising agent for import of copper and M/s Hindustan Copper, another Govt. of India Corporation followed the pricing fixed by MMTC. Thus as far as the domestic sale price of copper is concerned, there was a standard practice followed. It was in that context the said decision was rendered. In the facts of the case before us, there is no such arrangement of fixing of prices in the domestic market and the prices are purely governed by market forces of demand and supply. If that be so, I do not understand how the ratio of the decision in the Hindustan Copper would apply. The ratio of Alnoori Tobacco Products case cited supra would come into operation and I hold accordingly. 2.5 In the present case, the imported goods were not sold as such but were captively consumed in the manufacture of iron and steel products which were sold by the appellant. However, the principles of unjust enrichment applies to captive consumption situation also as held by the Hon'ble Apex Court in the case of Solar Pesticides Pvt. Ltd. [2000 (116) ELT 401 (SC)], - 17 . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot is a question of fact and such fact has to be established based on the records maintained as per the accounting standards and the details given therein. If the duty incidence had not been passed on, the same should have been recorded as amounts due from the customs department in the receivables account. It is an admitted position that the records maintained did not reflect the duty paid on the raw materials as the amount due/receivable from the department. In the absence of such an evidence, an inference drawn by the Cost Accountant cannot be said to be reasonable rebuttal of the statutory presumption of passing on of the duty incidence. Whenever a question of fact is to be proved, the same has to be established by following the process known to law. I do not find any such establishment of fact by the appellant in the present case. This Tribunal in a number of decisions has held that Chartered Accountant's certificates is not a sufficient evidence to discharge the burden cast upon the appellants to prove that incidence of duty has not been passed on to the customers. The decision of the Tribunal in Hanil Era Textiles Ltd. [2008 (225) ELT 117] refers. Similarly in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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