2016 (2) TMI 1048 - AT - Customs

Refund of excess duty - denial on the ground that the appellant had failed to discharge the onus of establishing that the incidence of duty had not been passed on - also, as there was no payment of duty and, therefore, the refund claim as liable for rejection - Held that - Availment of an exemption notification which institutionalises a procedure of debit for its operational functioning cannot be considered to be a payment of duty and the consequence of the setting aside of the order of the first appellate authority would not render the appellant eligible for a refund. At best, the appellant can claim a restoration of the amount of credit that had been utilised in excess towards grant of exemption of duty foregone which now s superfluity as the pass book scheme is no longer in vogue and any restoration of credit would not be of benefit to the appellant - refund claim rightly rejected - appeal rejected - decided against appellant.

Summary

Issues:
1. Appeal against rejection of claim for refund of excess duty in consequence of assessment of bill of entry.
2. Interpretation of duty entitlement pass book scheme and exemption notification.
3. Determination of eligibility for refund of excess duty paid.
4. Consideration of operational functioning of the scheme in the Foreign Trade Policy.
5. Restoration of credit utilized in excess towards grant of exemption of duty foregone.

Analysis:
The appeal was filed by M/s Jindal Exports Ltd against the rejection of their claim for a refund of excess duty following the assessment of two bills of entry. The consignments of 'cigarette lighters' were imported under the duty entitlement pass book scheme by availing notification no. 104/95. The duty foregone was debited in a passbook, and the unit price in the bills of entry was increased. The Commissioner of Customs (Appeals) set aside the assessment order, leading the appellant to seek a refund of the excess duty. However, the original authority found that the appellant failed to prove that the duty incidence was not passed on, and as there was no actual payment of duty, the refund claim was rejected. The first appellate authority upheld this decision.

During the hearing, it was noted that the duty claimed to be paid in excess was actually a debit in the passbook under a scheme in the Foreign Trade Policy. The scheme operated by granting an exemption through notification no. 104/95. The tribunal determined that availing an exemption notification involving a debit for operational purposes cannot be equated to payment of duty. Therefore, setting aside the first appellate authority's order did not entitle the appellant to a refund. The appellant could only claim a restoration of the excess credit utilized towards the duty exemption, which was now redundant due to the scheme's discontinuation. Consequently, no relief would benefit the appellant, justifying the rejection of the refund claim by the lower authorities.

In conclusion, the tribunal rejected the appeal, emphasizing that the restoration of credit would not benefit the appellant as the passbook scheme was no longer in effect. The decision was pronounced in court on 07/02/2017.