2013 (10) TMI 627 - AT - Customs

Refund Unjust Enrichment - Held that - Commissioner of Customs vs Virudhunagar Textile Mills Ltd. 2008 (1) TMI 350 - HIGH COURT MADRAS - the legal presumption of unjust enrichment gets rebutted if the assessee produces a certificate of Chartered Accountant together with the balance sheet - not only has the balance sheet been produced in support of the CA s certificate but ledger accounts, journal voucher entries as well as certificates of the Accounts personnel and clarificatory certificate of the Auditor have been placed on record - These certificates are not blank certificates containing mere opinion of an Auditor but give detailed and specific reference to the primary documents of accounting entries, i.e. journal vouchers and trace such entries right till the published balance sheets. The CA s certificate does not refer to any entry posted after 17.02.2009 - Even though the balance sheet of the company is drawn up on 31.3.2009, an auditor can always issue a certificate in the course of the financial year, certifying the entries made in the books of account in the course of the year - The revenue, while alleging lacunas in the certificate presumes that accounts are drawn up only at the year end and not before that - This assumption is absurd as any assessee, particularly companies of the assessee s size and operations, would maintain regular books of account in the course of the year - The certificate of the Chartered Accountant dated 17.02.2009 clearly states that in the beginning itself that the said certificate was issued on verification of the books of account of the company - There is nothing wrong in the CA s certificate. The other discrepancy which has been pointed out in the revenue s appeal is that the assessee had initially claimed before the lower authority that it was not maintaining a bill of entry-wise ledger, though later on the auditor was able to give reconciliation between the balance sheet and the bill of entry - It was clarified by the counsel for the respondent that no ledger is ever maintained bill of entry wise and therefore the clarification given by the assessee to the lower authority was perfectly correct - The clarification, however, did not imply that no ledgers are maintained by the assessee - From the ledgers, the journal vouchers and the journal entries contained in the ledgers it was possible to correlate the excess payments shown as receivable with the specific bill of entry - There was, therefore, no contradiction whatsoever in the stand taken by the assessee. The costs which are required to be added under the established cost accounting principles are obviously costs which are in the nature of expenses incurred and debited to the books of account - If a particular amount has not been debited as expenditure in the books and shown straightway as receivables from the customers , the same would naturally be accounted towards cost of the finished product - The cost of products as per the CAS-4 can only include expenditure which is shown in the books and not amounts deposited which are receivables from the party with whom it had been deposited Decided against Revenue.

Issues Involved:
1. Unjust Enrichment
2. Power of Remand by Commissioner (Appeals)
3. Verification of Chartered Accountant's Certificate and Accounting Entries
4. Captive Consumption of Crude Palm Oil and Refund Claims

Issue-wise Detailed Analysis:

1. Unjust Enrichment:
The respondent, a 100% EOU, imported crude petroleum oil and stored it in a bonded warehouse without paying duty. The Assistant Commissioner of Customs confirmed the levies and ordered the recovery of interest. The respondent's appeal to the Commissioner (Appeals) was successful, with the Commissioner finding that the duty liability had not been passed on, thus rebutting the presumption of unjust enrichment. The Commissioner directed the lower authorities to sanction the refund to the respondent-assessee after verifying the correct amount. The Revenue challenged this, arguing that the refund claim was hit by the bar of unjust enrichment. However, the Commissioner (Appeals) had examined the balance sheets and Chartered Accountant's certificates, concluding that the duty had not been passed on to the buyers.

2. Power of Remand by Commissioner (Appeals):
The Revenue argued that the Commissioner (Appeals) erred in remanding the matter back to the adjudicating authority, citing that the power of remand was taken away by an amendment to Section 128A of the Customs Act, 1962. They referenced judgments from the Punjab & Haryana High Court and the Supreme Court. However, the Tribunal noted that the Gujarat High Court and other Tribunal decisions held that the Commissioner (Appeals) still had the power to remand. The Tribunal concluded that the directions given by the Commissioner (Appeals) for re-verifying certain aspects were not a remand but a measure to safeguard the revenue's interest.

3. Verification of Chartered Accountant's Certificate and Accounting Entries:
The Revenue questioned the genuineness of the Chartered Accountant's certificate and the correctness of the accounting entries. They argued that the Commissioner (Appeals) relied solely on the CA's certificate without examining other financial records. The Tribunal found this contention incorrect, noting that the Commissioner (Appeals) had verified the balance sheets, ledger accounts, and journal entries. The Tribunal also addressed the Revenue's concerns about the timing of the CA's certificate and the correlation between the balance sheet and the bill of entry, finding no contradictions or discrepancies.

4. Captive Consumption of Crude Palm Oil and Refund Claims:
The issue of captive consumption of crude palm oil and the refund of NCCD, Education Cess, and Higher Secondary Education Cess was addressed. The Tribunal noted that the adjudicating authority had held that the refund claim was barred by unjust enrichment, transferring the refund amounts to the Consumer Welfare Fund. However, the Commissioner (Appeals) found that the respondent had established that the duty had not been passed on, thus directing the refund. The Tribunal upheld the Commissioner (Appeals)'s decision, noting that the Revenue's appeal lacked merit.

Conclusion:
The Tribunal dismissed the Revenue's appeals, upholding the Commissioner (Appeals)'s order as legal and correct. The Tribunal found that the Commissioner (Appeals) had correctly concluded that the respondent had not passed on the duty liability, and the directions for re-verification were not a remand but a measure to safeguard the revenue's interest. The Tribunal also found no merit in the Revenue's contentions regarding the Chartered Accountant's certificate and accounting entries. The appeals were rejected, and the impugned order was upheld.

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