2010 (9) TMI 1021 - AT - Customs

Summary

Issues Involved:
1. Fulfillment of Export Obligation under EPCG Scheme.
2. Demand of Differential Duty and Interest.
3. Refund Claim and Unjust Enrichment.

Summary:

1. Fulfillment of Export Obligation under EPCG Scheme:
The appellants imported capital goods under the EPCG scheme availing a concessional duty rate of 15% ad valorem as per customs notification No. 160/92-Cus., dated 20-4-1992, with an obligation to export four times the CIF value of the capital goods over five years. They fulfilled only 25% of the export obligation within the stipulated period.

2. Demand of Differential Duty and Interest:
Due to the failure to fulfill 75% of the export obligation, a show cause notice dated 26-11-2001 was issued demanding a differential duty of Rs. 41,15,728/- along with interest. The appellants had already paid Rs. 72,61,371/- on 25-10-2000 before the notice. The Settlement Commission, Chennai, fixed the duty liability at Rs. 30,86,796/- and held that no interest was payable, ordering the adjustment of the duty amount against the amount already paid.

3. Refund Claim and Unjust Enrichment:
The appellants filed a refund claim for the differential amount of Rs. 41,74,575/-. The refund was sanctioned but credited to the Consumer Welfare Fund due to the failure to prove that the incidence of duty/interest was not passed on to any other person. The Commissioner (Appeals) upheld this decision.

Judgment:
The Tribunal found that the capital goods were used in manufacturing exported goods, indicating they were not part of the finished product. Citing the High Court of Madras in Collector of Customs, Madras v. Indo-Swiss Synthetic Gem Mfg. Co. Ltd., it was held that the incidence of duty on capital goods used in manufacturing does not pass on to customers. The Tribunal also referenced the case of C.C., Bangalore v. Motorola India Pvt. Ltd., affirming that amounts paid during investigations are deposits, not duties, and are not subject to unjust enrichment. Consequently, the Tribunal set aside the impugned order and allowed the appeal with consequential relief.