2015 (3) TMI 1078 - AT - Customs

Denial of refund claim - respondents had not produced the Chartered Accountant s certificate - respondents themselves had submitted before the original authority that the cost of coal imported has been absorbed and included in the cost of production - Held that - Certificate issued by the Cost Accountant is dt. 11/08/2008 whereas the OIO was passed on 11/06/2008. Therefore the certificate issued by the Cost Accountant was produced before the Commissioner(Appeals) only. Unfortunately the Commissioner (Appeals) did not notice the contradictions between the replay submitted by the importer at the time of replying to the show-cause notice proposing to reject refund claim that the cost of coal had been absorbed in the cost of production and therefore by not showing that SAD was not included there was a contradiction between the subsequent claim before the Commissioner(Appeals) and before the original authority. Moreover what exactly was the position in 2007-08 and what are provisions of requirements of Accounting Policies (Directors Responsibility Statement pursuant to Section 217(2)AA) also has not been considered in detail. It would be appropriate if the original authority reconsiders the issue by looking into the Cost Accountant s certificate as well as the contradictions between the reply to the show-cause notice and the Cost Accountant s certificate if any. There is also a need to examine the effect of Directors Responsibility as mentioned in the OIO. For these purposes the matter has to be remanded to the original authority. - Matter remanded back - Decided in favour of Revenue.

Summary

Issues involved:
Refund claim rejection based on absorbtion of cost of coal in production cost, evidence of unjust enrichment, relevance of certificates from Cost Accountant and Chartered Accountant, contradictions in submissions, need for reconsideration by original authority.

Analysis:
The case involved an appeal regarding the rejection of a refund claim by the Commissioner (Appeals) concerning the import of coal and the payment of Special Additional Duty (SAD). The respondent importer had imported coal under 6 Bills of Entry in 2006, with provisional assessment and SAD collection at 4%. The final assessment in 2007 resulted in a refund claim of &8377;42,45,654, which was initially rejected due to the importer's submission that the cost of coal, including SAD, had been absorbed in the production cost. The Chartered Accountant's certificate submitted was deemed irrelevant as it showed the amount as receivables in 2007.

The Commissioner (Appeals) overturned the rejection, citing evidence that the importer had not unjustly enriched themselves. This evidence included a Cost Accountant's certificate indicating the SAD portion was not included in the cost of production and a Chartered Accountant's certificate stating SAD was not passed on to customers. However, there were discrepancies between the importer's submissions and the certificates presented. The Cost Accountant's certificate was produced after the original order, raising questions about the timing and relevance of the evidence.

The Tribunal found that the Commissioner (Appeals) did not adequately consider the contradictions in the importer's submissions and the certificates, nor did they analyze the Accounting Policies requirements for the relevant period. Therefore, the Tribunal set aside the impugned order and remanded the matter to the original authority for a fresh review. The original authority was instructed to reexamine the issues, including the certificates from the Cost Accountant and Chartered Accountant, contradictions in submissions, and the impact of Accounting Policies on the case.

In conclusion, the Tribunal emphasized the importance of a thorough reconsideration by the original authority to address the complexities surrounding the refund claim, the evidence of unjust enrichment, and the discrepancies in the submissions and certificates provided. The case highlights the significance of proper documentation, timing of evidence submission, and adherence to accounting standards in resolving customs duty refund disputes.