2011 (6) TMI 470 - AT - Customs

Refund Claim relates to duties of Customs paid in excess of that payable on the goods imported - Board vide CBEC Circular No. 65/97-Cus. dated 27.11.97 clarified that CESS on synthetic rubber is not payable. The levy of Special Customs duty and Special Additional Customs duty on Nylon Tyre Cord Fabrics was also abolished in the Budget of 1998 - budget for the year 1998 was presented on 01-06-98 and from 02-06-98 the SCD and SACD stood abolished Held that - refund claim is on account of these duties paid on raw materials used earlier, when prices were declared after taking into consideration the changes made in the 1998 budget the prices have come down, In the budget the impugned duties were withdrawn, for the earlier period the Appellant was passing on the incidence of the said duties though they were expecting a refund of such duties and they made appropriate entries in their financial accounts, Appellant was expecting a refund and cannot prove that they were not passing on the incidence which they were bearing at least temporarily, burden of proving that the incidence is not passed on is on the Appellant as per provisions of the Customs Act, it is not proper to interfere with the order of the Commissioner (Appeal), Appeal filed is rejected

Issues Involved:
1. Refund claim of excess customs duty.
2. Applicability of unjust enrichment clause.
3. Evaluation of evidence to prove non-passing of duty incidence to consumers.
4. Compliance with the provisions of Section 27(2) of the Customs Act.
5. Consideration of previous Tribunal and Supreme Court judgments.

Issue-wise Detailed Analysis:

1. Refund claim of excess customs duty:
The Appellant filed four refund claims in 1998 for nylon tyre cord fabrics imported in 1997, used for manufacturing tyres. The refund was sanctioned but credited to the Consumer Welfare Fund under Section 27(2) of the Customs Act. The Appellant contested that the refund should be paid to them directly.

2. Applicability of unjust enrichment clause:
The adjudicating authority and Commissioner (Appeal) denied the refund to the Appellant, citing the unjust enrichment clause. According to the Supreme Court's judgment in Union of India Vs Solar Pesticides Pvt Ltd, the unjust enrichment clause applies to goods captively consumed for manufacturing tyres. The authorities inferred that the Appellant had passed on the duty incidence to consumers, thus not entitled to the refund.

3. Evaluation of evidence to prove non-passing of duty incidence to consumers:
The Appellant presented various documents to the adjudicating authority, including Chartered Accountant (CA) certificates, journal vouchers, trial balances, price lists, invoices, and material cost data. The CA certificates indicated that the excess duty was included in the advance account and not adjusted in the profit and loss account. However, the adjudicating authority found the CA certificates insufficient as they did not certify that the duty element was excluded in computing the cost of the final product (tyres). The authority also noted inconsistencies and the timing of the journal voucher preparation, which raised doubts about the authenticity of the evidence.

4. Compliance with the provisions of Section 27(2) of the Customs Act:
The Tribunal previously directed the adjudicating authority to re-examine the evidence and decide afresh. Despite this, the adjudicating authority and Commissioner (Appeal) maintained their stance, leading to the current appeal. The Tribunal observed that the Appellant's evidence, including financial entries and CA certificates, failed to conclusively prove non-passing of duty incidence. The Tribunal emphasized that the burden of proof lies on the Appellant as per Section 11B of the Customs Act.

5. Consideration of previous Tribunal and Supreme Court judgments:
The Appellant cited various decisions to support their case, arguing that CA certificates and financial entries should suffice to prove non-passing of duty incidence. However, the Tribunal distinguished the present case, noting that the evidence provided by the Appellant indicated that the duty incidence was indeed passed on to consumers. The Tribunal decided not to follow the cited decisions blindly due to the direct evidence to the contrary in this case.

Conclusion:
The Tribunal concluded that the Appellant failed to discharge the burden of proof required under Section 11B of the Customs Act. The evidence provided by the Appellant suggested that the duty incidence was passed on to consumers. Consequently, the Tribunal upheld the order of the Commissioner (Appeal) and rejected the appeal.

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