TMI Blog2002 (7) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... ent holding that the Appellants had not been able to prove by any documentary evidence that the duty was borne by them, and that the Customs duty was not indicated in balance sheet as outstanding/ recoverable; that the Commissioner (Appeals) also under the impugned Order, rejected their appeal relying upon the judgment of the Supreme Court in the case of Mafatlal Industires v. U.O.I., 1997 (89) E.L.T. 247 (S.C.) and holding that merely by remarking in the invoices that the prices did not include customs duty and by continuing to maintain the same price it cannot be said that they had not passed on the burden of duty. The learned Counsel submitted that the Supreme Court did not intend to hold nor has it held that in every case, without exception, it will be deemed that the incidence of duty has been passed on to the customer; that it will be possible for an assessee or importer to prove in a given case that the incidence of duty has not been passed on to the customer; that it is evident from the judgment of the Supreme Court in Living Media India Ltd. v. UOI, 1998 (104) E.L.T 3 (S.C.); that in a given case it is possible to establish that the duty incidence has not been passed on to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D.R., submitted that the appellants have not shown the amount of refund claimed by them, in their balance sheet as an outstanding amount; that this goes to show that the incidence of customs duty was not borne by them; that with the intent to remain in the market, they had sold the goods at the price prevalent prior to the payment of duty; that the affidavit filed by the Director is subsequent to the event and as such is of no relevance; that the judgment of the Supreme Court in Solar Pesticides case makes it very clear that the phrase 'incidence of duty' is of wide implications than the burden of duty; that for arriving at the price of the product, all expenses incurred has to be included. He finally submitted that the ratio of the decision in the case of New Trade Links, supra, is not applicable as the facts are different since the Collector (Appeals) in that matter had considered the correspondence regarding the unsuccessful attempts by the assessee to increase its sale price. 4. We have considered the submissions of both the sides. As per provisions of Section 27 of the Customs Act, any person claiming refund of duty has to furnish evidence to establish that the amount of dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here or for other commercial reasons, it may happen that the manufacturer is obliged to sell his goods at less than its proper price. The suggestion is that the manufacturer may have to forego not only his profit but also part of excise duty and that in such a case levy and collection of full excise duty would cease to be a duty of excise; it will become a tax on income or on business. We are unable to appreciate this argument. Ordinarily, no manufacturer will sell his products at less than the cost price plus duty. He cannot survive in business if he does so. Only in case of distress sales, such a thing is understandable but distress sales are not a normal feature and cannot, therefore, constitute a basis for judging the validity or reasonableness of a provision. Similarly, no one will ordinarily pass on less excise duty than what is exigible and payable. A manufacturer may dip into his profits but would not further dip into the excise duty component. He will do so only in the case of a distress sale again. Just because duty is not separately shown in the invoice price, it does not follow that the manufacturer is not passing on the duty. Nor does it follow therefrom that the manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturer as a class are knowledgeable persons and more often than not have the benefit of legal advice. And until about 1992, at any rate, Indian market was by and large a sellers' market." 6. In view of the above, merely by remarking in the invoices that the prices do not include customs duty and indicating in the statements that by continuing to maintain the same price all along the appellants have incurred losses and not passed on the burden of duty, does not hold water. The appellants did not pass on the burden of duty is a question of fact well within the knowledge of the appellants. It has to be proved by them. Simply by dipping their profit margins, the appellants cannot claim that they have not passed on the burden of duty. The fact is that their expenses had increased and this might have reduced their profit margins. In Solar Pesticides v. Union of India reported in 2000 (116) E.L.T 401, the Apex Court has observed that where the duty paid on raw materials is added to the price of the finished goods which are sold, the incidence of the duty on the raw material would stand passed on to the purchaser of the finished product. The finished product of the appellant bears nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant does not have a claim on this amount since it is apparent from the balance sheet that he has not shown this amount as disputed one. The appellants' submission that their case is squarely covered by the Apex Court judgment in the case of M/s. Living Media cannot stand close scrutiny. In that case, the finding was that M/s. Living Media had two separate sources of income/revenue; one from sale of magazines and another from advertisements in the magazines. In that event, the Hon'ble Apex Court took the view that the sale price of the magazines was clearly less than the cost price of the inputs and so could not be construed to be made-up of the disputed amount of duty as well. In this case, the product was admittedly sold to earn goodwill. It was not a distress sale or a sale which indirectly fetched revenue from another source upon sale of the product. The contention that the drug control policy or the product being an essential goods forced them to sell the product at a lesser price is not convincing. The goods were not subsidised by the Government. No manufacturer or trader will be charitable enough to sell at a price lower than the cost of price except for commercial re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in each case of claim of refund viz., "(iii) A claim for refund, whether made under the provisions of the Act as contemplated in proposition (i) above or in a suit or writ petition in the situations contemplated by proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of duty or to the extent he has not so passed on, as the case may be". If this be the legal proposition laid down by the Apex Court on the principle of unjust enrichment, one cannot at all say that by mere fact of the price remaining the same even after levy of duty or enhancement of duty, the burden of duty has not been passed on to another person. There may be a case where the price remaining the same after levy of duty where the burden of tax has not been passed on whereas in another case, the same is passed on. Similarly, the mere increase in the sale price after levy of duty in itself cannot determine that the burden of duty has been passed on. Whether the burden of duty has been passed on or no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim on the grounds of unjust enrichment was rejected. The facts in the present case though in reverse, are identical to those in the cited decision of M/s. JCL International. In that case, the appellant had mentioned in the invoice that the sale price was inclusive of excise duty whereas in the case under consideration, the appellants have clearly mentioned in their invoice that the sale price does not include the customs duty. Therefore, the ratio of the cited decision will apply to these facts. The same view is held in the decision of the Tribunal in Xerox Modi Corporation Ltd. v. CCE, Meerut, 2001 (134) E.L.T. 523 (Tri. - Del). On appeal by the party against this decision, the same is dismissed by the Hon'ble Supreme Court as reported in Court Room Highlights - 2002 (142) E.L.T. A173-174. In this case the Tribunal has observed, "Since in this case; it is not disputed that the excise duty element which is paid to the department is reflected in the sale invoice of the party, the same is therefore realised from the buyers". Apart from the above, the appellants are also pleading that their product is sold strictly as per the Drug laws including selling at the pre-determined prices ..... X X X X Extracts X X X X X X X X Extracts X X X X
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