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Ispat Industries Ltd. Versus Commissioner of Customs (Prev), Mumbai

2015 (4) TMI 278 - CESTAT MUMBAI (LB)

Denial of refund claim - Unjust enrichment - Duty paid under protest - refund ordered by Apex court [2006 (9) TMI 181 - SUPREME COURT OF INDIA] - whether the appellant has crossed the bar of unjust enrichment in this case - Difference of opinion - Majority order - Held that:- Court have perused the certificate dated 25-5-2009 given by the Cost Accountant M/s Dinesh Jain & Co. The said certificate merely states that based on the audited financial statements of Ispat Industries for the respective .....

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her relevant factors. In the absence of any such analysis, the said certificate has 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 absen .....

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sfactory 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:- 4-3-2015 - Ashok Jindal, Member (J), P K Jain, Member (T) And P. R. Chandrasekharan, Member (T),JJ. For the Appellants : Shri Vishal Agarwal, Advocate For the Respondent : Shri Devendra Nagvenkar, (AR) ORDER Per: M .....

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ng Light, from where daughter vessel carried the cargo upto the jetty at Dharamtar. Therefore a dispute arose on the issue whether the expenses incurred for carrying the goods discharged at Bombay Floating Light to Dharamtar jetty through barge/daughter vessel were includible in the assessable value for the purpose of calculating customs duty, being cost of transportation. This Tribunal confirmed the demand by upholding that for the period January 1995 to January 1997 the said transportation cha .....

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ompelled to pay duty component on Barge charges, which appellant paid under protest. On 29.09.2006, the Hon'ble Apex Court 2006 (202) E.L.T. 561 (SC) held that in no uncertain terms, that the Barge charges were not includible in the assessable value of imported goods. Thereafter the Hon'ble Apex Court ordered as under:- "Any amounts collected by the Revenue as duty on Barge charges shall be refunded forthwith to the assessee with statutory interest from the date of payment to the da .....

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how-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 .....

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tted on behalf of the appellant before the Asst. Commissioner that the appellant are operating in losses, therefore the question of passing on incidence of duty does not arise, as held by the Hon'ble Apex Court in the case of Living Media Industries Ltd. 1998 (104) ELT 3 (SC) . 2.4. After considering the submissions made by the appellant before the Asst. Commissioner, the refund claims along with interest of ₹ 6,29,05,799/- were sanctioned along with interest. 2.5. The said order was r .....

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d on stevedoring charges on which the customs authorities have confirmed the duty. d) in case of the imports made by the appellant after 1998, it was observed that in many of the import transactions and the facts and circumstances of importation are factually different. In those cases the supplier was under a contractual obligation to deliver the goods at Dharamtar port. e) the appellant has not passed on the bar of unjust enrichment and is required to pass the unjust enrichment as held by the H .....

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aims have been filed by the appellant in terms of the direction of the Hon'ble Apex Court order dated 29.09.2006. 4. After filing the refund claims, a show-cause notice was issued wherein dispute regarding quantum of 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 refu .....

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, 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 Authority. 6. In this case, the only issue arose from the order of the Adjudicating Aut .....

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law - i) CCE vs. Carrier Aircon Ltd. 2003 (159) ELT 315 (T-Del) which has been confirmed by the Hon'ble Apex Court in 2005 (184) ELT 113 (SC) ii) CC vs. Pheonix Overseas P. Ltd. 1992 (62) ELT 366 (T) iii) CCE vs. Eastern Aeromatics P. Ltd. 1999 (107) ELT 208. 7. It is further submitted that it is a settled law that the show-cause notice is the foundation of any proceedings and it is not open to the department to go beyond the allegations levelled in the show-cause notice. In this case, show .....

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ble. Therefore, the impugned order is required to be set aside on this sole ground. 9. He further submits that it is observed by the Commissioner (Appeals) that no appeal having been filed against the order of finalisation of the provisional assessment during the period 1998 to 2004-05, the appellant had requested for evidence to be produced regarding finalisation of the provisional assessment which has not been produced. He further submits that the certain letters addressed with respect to the .....

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orts 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, .....

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is further submitted that the issue of admissibility of refund has been contested by the appellant on issuance of the show-cause notice and the refund claim was reduced as claimed by the appellant. In review order, the Commissioner has found that the points which have not been discussed by the Adjudicating Authority which caused impropriety or illegality, therefore, the review was conducted correctly, and the review order does not raise any extraneous grounds. It is further submitted that the d .....

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sanctioned for stevedoring charges also, which is totally incorrect. It is further submitted that after 1998, the method of contracting changed and same has not been clarified by the appellant. Therefore, on this ground, the rejection of refund claim is justified. It is further submitted that bar of unjust enrichment is applicable to the facts of this cse in the light of the decision of Hon'ble High Court of Bombay in Bussa Overseas 2003 (158) ELT 135 which was upheld by the Hon'ble Apex .....

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ns. 14. After considering the facts of the case, we find that the appellant has filed the refund claim in pursuant to the direction of the Hon'ble Apex Court in the order dated 29.09.2006. 14.1. For entertaining the refund claim, a show-cause notice was issued to the appellant to dispute the quantum of refund claim and why the refund claim not be rejected on the ground of unjust enrichment. Therefore, as per the show-cause notice, the quantum of refund claim was disputed and the issue of bar .....

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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. B .....

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e is of quantum of the refund claim and bar of unjust enrichment. As discussed above, the quantum has not been disputed by the appellant and the Adjudicating Authority has held that the bar of unjust enrichment has been passed on by the appellant but the claim of the revenue is that the bar of unjust enrichment is not passed on. Therefore, the adjudication order could have been challenged only on the ground of bar of unjust enrichment, not on the other grounds as considered by the ld. Commission .....

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is well determined principle that nobody can go beyond the scope of the dispute in proceedings before the Adjudicating Authority as held by the Tribunal in Carrier Aircon Ltd. (supra) wherein this Tribunal has observed as under:- "3. We have carefully considered the rival submissions and perused the records. The show cause notice alleges that chillers are nothing but parts of airconditioners and become complete airconditioner when fitted with air handling unit and description and functions .....

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g 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. .....

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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 other refrigerating or freezing equipment, electric or other heat pumps other than airconditioning machine of heading No. 84.15 . Invariably all the manufacturers of chiller package units by such misclassification are evading excise duty, since the excise duty applicable under Tariff No. 84.15 @ 30% whereas under the Tariff No. 84.1 .....

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ly is sent to the cooling tower as explained above can also be used for heating application in which case the chiller package unit function as a Heat pump (In such application the chilled water produced in the chiller package units is sent to an external heat exchanger to gain heat so that it can be recycled.) This duel functioning of the chiller package unit is used as a probable rationale by the manufacturers to clear these goods at a lower excise duty under heading 8418.10. However, the heati .....

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nes of Tariff heading 84.15 and not 84.18 . A comparison of the grounds raised in the notice with the grounds of appeal in the review order would show that they are different from each other and that the review order is entirely based upon the report of the Central Economic Intelligence Bureau. We, therefore, agree with the appellants that the review order seeks to make out a new case against them. This is not legally permissible under Section 35E(2), the Commissioner of Central Excise may of hi .....

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us 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 .....

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e impugned order and allow the appeal on this preliminary point alone without going into the merits of the classification of the disputed product." 19. Again in the case of Eastern Aermatics P. Ltd. (supra) wherein this Tribunal has observed as under:- "4. We have considered the submissions and perused the records. It is evident from the order dated 9-10-1991 of the Assistant Collector that the show cause notice was issued for classifying the impugned product only as "Resinoid&quo .....

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Act has to be confirmed to the points arising out of the order under (Review). This view was held by the Appellate Tribunal in the case of Extrusion Processes Ltd. v. C.C.E. Bombay - 1994 (69) E.L.T. 144. Both the lower authorities have dealt with the manufacturing process of the impugned product which is obtained after subjecting the Vetiverol oil to distillation and it remians as a residue in the pot; that it is undistillable waste. We also observe from the order of the Assistant Collector th .....

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to the issue of unjust enrichment. 21. As discussed above, as the selling price was less than the cost of production therefore passing of duty on the buyer does not arise. Therefore, 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. Brot .....

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le 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 points arising out of the decision. Commissioner (Appeals) after issuing the due notice to the appellants adjudicated on the specified .....

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o 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 Customs in his order." 26. It would thus be seen that under the said provision of the Customs Act, 1962, the Commissioner of Customs is empowered to call for and examine the record of any proceeding in which an adjudicating authority subordinate to him has passed any decision or order under this Act for the purpose of satisfying himself a .....

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in pursuance of an order of assessment; or (ii) borne by him, may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Customs - (a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, before the expiry of one year; (b) in any other case, before the expiry of six months, From the date of payment of duty and interest, if any pai .....

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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 dut .....

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te of purchase of goods" by such person. (2) If, on receipt of any such application, the Assistant Commissioner of Customs of Customs is satisfied that the whole or any part of the duty and interest, if any, paid on such duty paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund Provided that the amount of duty and interest, if any, paid on such duty as determined by the Assistant Commissioner of Customs under the fo .....

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the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (d) the export duty as specified in section 26; (e) drawback of duty payable under sections 74 and 75; (f) the duty and interest, if any, paid on such duty borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify : Provided further that no notification under clause (f) proviso shall be issued unless in the o .....

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Section 27 would indicate that any person claiming refund of duty is required to make an application within time limit prescribed under the Act. The application has to be accompanied by various documents/evidences. Thereafter the Asst. Commissioner is required to examine the claim of the person, and if he is satisfied, 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 i .....

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ses, 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 a .....

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l and legal matrix, in the context of the refund claim, the proceedings stipulated under Section 129D(2) would imply all the actions of the Asst. Commissioner from the moment refund claim is filed to the time a final decision on the refund claim. Issuance or non-issuance of the show-cause notice is of no consequence as far as Section 129D(2) of the Customs Act is concerned. If issued, it is part of the proceedings and not the starting point of the proceedings. Thus under Section 129D(2) the Comm .....

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sued and the refund claim is sanctioned by the Asst. Commissioner as claimed by the applicant and thereafter the Commissioner in exercise of the power under Section 129D(2) examines the proceedings and direct the Asstt. Commissioner to apply for determination of certain points before the Commissioner (Appeals). 29. It may be added here that the position in respect of recovery of duties not levied or short levied or erroneously refunded under Section 28 of the Customs Act, 1962 is different. Unde .....

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und 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 .....

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ld. Brother has observed that the appellant has filed the refund claim in pursuant to the direction of the Hon'ble Apex Court in the order dated 29.09.2006. In my opinion, this is partly true and partly incorrect. The issue before the Hon'ble Supreme Court was only for barging charges and was limited to the period 1994-95 to 1997-98, while the refund claim is not only for the barging charge but for stevedoring charges also. Moreover, the refund claim was not only for the period 1994-95 .....

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of Customs, are therefore within limits and as per the powers conferred on him under Section 129D(2) of the Customs Act, 1962. The points raised are not beyond the scope of Section 129D(2) of the Customs Act, 1962. Appellant's contention is therefore rejected in this regard. We will be discussing the points raised by the Commissioner of Customs and decided by Commissioner of Customs (Appeals) after discussing the bar of unjust enrichment. 32. As far as bar of unjust enrichment is concerned, .....

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Excise matters as is the case before us, while the case of M/s. Hindustan Copper Ltd. (supra) is relating to state excise. In view of above reasons, judgment in the case of Solar Pesticides has to be given precedence over the case of M/s. Hindustan Copper Ltd. 33. My ld. Brother has taken the view that 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 ha .....

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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 th .....

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d and that only such price could be charged and that no part of the duty in respect of rectified spirit captivity consumed in the manufacture of copper could be added to the price of copper which was fixed on the basis of the LME prices. We have no reason to doubt the correctness of the aforesaid statement contained in the said affidavit. In the circumstances, no case is made out for interference with the direction contained in the impugned judgment of the High Court regarding refund of excise d .....

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s negligible in the overall cost of production and there was no challenge about competency of centre to levy the same. 35. The Hon'ble Apex Court in the case of UOI vs. Solar Pesticides Pvt. Ltd. 2000 (116) ELT 401 (SC) has examined exactly the same issue that is relating to passing of burden of duty in the case of captive consumption of goods and has observed as under:- "20. We are of the opinion that the aforesaid observations would be applicable in the case of captive consumption as .....

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sed on the burden of tax to another person, directly or indirectly, it would clearly be a case of unjust enrichment 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 .....

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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 raw material had not gone into the costing of the finished product. Without going into the correctness of this finding we wish to emphasize that even in cases of captive consumption, it should be .....

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be examined as per the decision of the Hon'ble Apex Court in the case of Solar Pesticides P. Ltd. (supra). 37. It is also noted by my ld. Brother that since the appellant was operating in losses i.e. selling price is less than the cost of production, the 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). I have also gone through the Supreme Court decision in Living Media Industries Ltd. (supra) .....

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le in the facts and circumstances of the case. The facts in the present case are very different. Here the price at which the final products were being sold were market driven and not fixed as in case of newspaper there was no change in the rate of duty for a short period as was the case in the case of Living Media Industries Ltd. (supra). Appellant themselves have claimed that the duty involved due to barging charges is negligible. In view of this position, the facts of the present case are enti .....

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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 d .....

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. In the present case, the appellant has not claimed that in the balance sheet the said amount is being shown as receivable. Since the amount is not being shown as receivables, it can be safely concluded that the appellant themselves have been considering the duty burden as cost of inputs or production and under the circumstances, it has to be held that the appellant has failed to establish that the burden of duty has not been passed on to the consumer and therefore, doctrine of unjust enrichmen .....

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The direction of the Hon'ble Supreme Court in the said order is applicable for the said period. I also note that the revenue is not questioning the refund claim for the period up to 1997-98 except on the issue of unjust enrichment. Undoubtedly, the issue discussed and the conclusions drawn by the Hon'ble Supreme Court would have to be kept in mind for examining the refund claim for the subsequent period also viz. 1998-99 to 2004-05. 41. The revenue has contended that after 1998 in many .....

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claim is true. Details of such contract or copy of contracts have not been produced. It is also noted that the Commissioner (Appeals) has upheld the above argument but has not quantified the amount. During the hearing, we asked the appellant the details of such cases or copies of the contract 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 .....

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le 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 charges. Under t .....

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ng charges are includable in the assessable value. The appellant disputed the barging charges and issue went up to the Hon'ble Supreme Court. However, the appellant has started paying duty on the same. As the final figures would not be available, they paid differential amount as and when the provisional assessments were finalised. However, they have also lodged protest and as admitted by the revenue, the protest letters were sent in each case at the time of finalisation of the bills of entry .....

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ment of the Hon'ble Supreme Court in the case of Priya Blue will not be applicable as the issue was very much challenged by the appellant and was before the Hon'ble Supreme Court. In my view, since the protest letters were admittedly sent to the revenue and were received, the time limit prescribed under Section 27 of the Customs Act, 1962 would not be applicable for claiming of refund as far as duty leviable on barging charges alone is concerned. 44. Another issue wherein the original au .....

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(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, di .....

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s. Observation and ratio of the Hon'ble Supreme Court judgment in the case of Mafatlal Industries Ltd. (supra), Sahakar Khand Udyog Mandal Ltd. (supra) and that of Hon'ble Bombay High Court in the case of Bussa Overseas & Properties P. Ltd. (supra) would be applicable viz. appellant will have to pass the bar of unjust enrichment. Difference of Opinion In view of the difference of opinion between the two Members, the matter may be referred to the President to appoint a Third Member to .....

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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). 2) In the facts and circumstances of the case, whether the bar of unjust enrichment will not be applicable as held by Member (Judicial .....

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Chandrasekharan The first point of difference referred to me for consideration reads as follows:- Whether in the facts and circumstances of the case, whether reviewing authority cannot go beyond the show-cause notice as held by Member (Judicial); or In case of refund claim, the proceedings start from the time refund claim is filed and since there is no requirement of issuing show-cause notice under Section 27 of the Customs Act, 1962, and therefore, reviewing authority can go into any point whic .....

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unal 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 decisio .....

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nal Bombay High Court in Bajaj Auto Ltd. [2003 (151) ELT 23 (Bom.)] wherein it was held that mere filing of application under section 35E of the Central Excise Act would not absolve Revenue of the obligation to issue show cause notice within the time stipulated under Section 11A for recovery of erroneous refund. It was further held in the said order that if a ground is not taken in the show cause notice for recovery of erroneous refund, the same cannot be taken in the revision proceedings and Re .....

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ssued by the department if it intends rejecting refund claims found to be incomplete or not supported by required documents or on the ground of unjust enrichment. In the present case, it is not in dispute that the only ground urged in the show cause notice issued was unjust enrichment. If that be so, Revenue cannot take recourse to Section 35E/129 (D) and urge additional grounds for rejection of refund claim or recovery of erroneous refund. Thus, the reference is answered in favour of the appell .....

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ble by the appellant." 2.1 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 .....

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ia 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 there was a settlement/agreement reached peculiar and special facts/circumstances of the said case, the Hon'ble Apex Court held that the principle of unjust enrichment will not apply considering the affidavit of the petitioner that the retail sale price of the news ma .....

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the fact situation obtaining is identical. The hon'ble Supreme Court in the case of CCE v. Alnoori Tobacco Products, 2004 (170) ELT 135 (SC) held that - "Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observation .....

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red view that the facts of the case before me are different and distinguishable from those obtaining in the Living Media case and hence, the ratio of the said decision shall not apply. 2.2 A nine judge bench of the hon'ble Apex Court in the Mafatlal Industries Ltd. case [1997 (89) ELT 247 (SC)] laid down the dictum that every refund of duty under the Customs Act or the Central Excise Act would be governed by the provisions of unjust enrichment in the following words:- "96. It would be e .....

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g-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 .....

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1962 is concerned, under Section 27(3), no refund of duty and interest can be made without satisfying the requirements of subsection (2). Therefore, even though under Section 18, subsection (5) has been introduced w.e.f. 13.07.2006, the issue of refund was always subject to the provisions of Section 28(3), considering that Sections 18(2)(a) applies to final assessment. ......." Thus it is clear that the provisions of unjust enrichment would apply even in cases of refunds arising out of fin .....

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certificate dated 25-5-2009 given by the Cost Accountant, the appellant has incurred operating loss(es) throughout the period from 1998-99 to 2005-06 and therefore, the appellant has not passed on the incidence of duty on barge and stevedoring charges to any other person. He has placed heavy reliance on the decision of the Hon'ble Apex Court in the case of State of Rajasthan vs. Hindustan Copper Ltd. [MANU/SC/1640/1998]. In the said case, it was held that when the goods are sold in the domes .....

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are governed by market conditions and the goods are sold at a loss, there would be a presumption in favour of the assessee that the incidence of tax has not bee passed on to the buyers. I have carefully considered this contention. As far 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 M .....

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a 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 . The use of the words "incidence of such duty…..&quo .....

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ase where the duty paid on raw material is added to the price of the finished goods which are sold in which case the burden or the incidence of the duty on the raw material would stand passed on to the purchaser of the finished product. It would follow from the above that when the whole or part of the duty which is incurred on the import of the raw material is passed on to another person then an application for refund of such duty would not be allowed under Section 27(1) of the Act." 2.6 Th .....

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further based on the information and explanations furnished to us by the Company, we wish to confirm that the incidence of customs duty has not been passed on by Ispat Industries Ltd. to any other person. In the attached statement the particulars furnished for the various years are - a) operating income from sale of steel products; b) operating expenditure; c) operating profit/loss; and d) other income. There is no analysis whatsoever about the cost of production of the steel products sold, the .....

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rds 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 passin .....

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n Hanil Era Textiles Ltd. [2008 (225) ELT 117] refers. Similarly in the case of JCT Limited [2004 (163) ELT 467 (Tri-Del)] it was held that Chartered Accountant's Certificate is not sufficient to rebut the statutory presumption of duty incidence having been passed on to the buyers. The said decision was also affirmed by the Hon'ble Punjab & Haryana High Court in the same case reported in [2006 (202) ELT 773 (P&H)]. In view of the aforesaid decisions, I am of the considered view t .....

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ect of the first point of reference about the scope of review under Section129 D of the Customs Act. 4. To conclude, I agree with the Hon'ble Member (Judicial) that in a review proceedings, the Commissioner cannot go beyond the show cause notice issued to the appellant and the review proceedings are not a substitute for a notice for recovery of erroneous refund. However, as regards the question of unjust enrichment, I agree with the Hon'ble Member (Technical) that the appellant has not d .....

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