2011 (8) TMI 948 - AT - Customs

Refund has been sanctioned but credited to Consumer Welfare Fund as per provisions of Section 27(2) of the Customs Act - it is inferred that Chartered Accountant s certificate by itself are not conclusive proof of not passing the burden of duty incidence to their ultimate customers. I find that many inputs are used for manufacture of tyre and it is obvious that cost of every input contributes towards the cost of a tyre - During the hearing the Counsel for the Appellant submits that they had produced as much evidence as possible and they are at their wit s end as to what other evidence could be produced, to prove that the incidence of the impugned duty was not passed on to the consumer - It is clear from the data given above that from 8-6-98, that is when prices were declared after taking into consideration the changes made in the 1998 budget the prices have come down - The burden of proving that the incidence is not passed on is on the Appellant - Appeal is rejected

Issues Involved:
1. Refund claim for excess customs duty paid.
2. Application of the unjust enrichment clause.
3. Adequacy of evidence to prove non-passing of duty incidence.

Issue-wise Detailed Analysis:

1. Refund Claim for Excess Customs Duty Paid:
The Appellant filed four refund claims in 1998 for excess customs duty paid on nylon tyre cord fabrics imported in 1997. These goods were used in the manufacture of tyres. The refund claims were sanctioned but credited to the Consumer Welfare Fund under Section 27(2) of the Customs Act, leading to the Appellant's grievance that the amount should be paid to them.

2. Application of the Unjust Enrichment Clause:
The Tribunal previously disposed of the matter, directing the adjudicating authority to reconsider the evidence provided by the Appellant to prove non-passing of the duty incidence. The Appellant submitted various documents, including Chartered Accountant (C.A.) certificates, journal vouchers, trial balances, price lists, invoices, and statements of outstanding liabilities. However, the adjudicating authority and the Commissioner (Appeals) concluded that the unjust enrichment clause applied, as the Appellant failed to prove that the incidence of duty was not passed on to the consumers.

3. Adequacy of Evidence to Prove Non-Passing of Duty Incidence:
The Appellant argued that the evidence provided, including C.A. certificates and financial documents, was sufficient to prove non-passing of the duty incidence. The adjudicating authority found that the C.A. certificates did not explicitly state that the cost of inputs excluded the duty element in computing the cost of the final product. The trial balance and journal vouchers indicated anticipation of a refund but did not conclusively prove non-passing of the duty incidence. The adjudicating authority also noted an increasing trend in material costs, suggesting that the duty incidence was passed on to the consumers.

During the hearing, the Appellant expressed willingness to provide any additional evidence as specified by the Tribunal. They reiterated that the excess customs duty paid was booked under "Loans and Advances" and not treated as an expenditure item, hence not included in the cost of production of tyres. The Respondent argued that the C.A. certificates and financial entries did not meet the burden of proof required under Section 11B of the Customs Act.

Conclusion:
The Tribunal considered the arguments and evidence from both sides. They found that the data submitted by the Appellant indicated a reduction in prices after the budget of 1998, implying that the incidence of the duties was passed on to consumers. The Tribunal concluded that the Appellant's evidence only demonstrated anticipation of a refund, not non-passing of the duty incidence. Consequently, the Tribunal upheld the order of the Commissioner (Appeals) and rejected the appeal, emphasizing the burden of proof on the Appellant as per Section 11B of the Customs Act. The appeal was pronounced rejected on 26-8-2011.

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