2015 (4) TMI 278 - AT - Customs

Denial of refund claim - Unjust enrichment - Duty paid under protest - refund ordered by Apex court 2006 (9) TMI 181 - SUPREME COURT OF INDIA - whether the appellant has crossed the bar of unjust enrichment in this case - Difference of opinion - Majority order - Held that - Court have perused the certificate dated 25-5-2009 given by the Cost Accountant M/s Dinesh Jain & Co. The said certificate merely states that based on the audited financial statements of Ispat Industries for the respective years contained in the attached statement and further based on the information and explanations furnished to us by the Company, we wish to confirm that the incidence of customs duty has not been passed on by Ispat Industries Ltd. to any other person. - There is no analysis whatsoever about the cost of production of the steel products sold, the factors that constituted the cost of production, whether the duty incidence on the raw materials was considered while taking the cost of production and other relevant factors. In the absence of any such analysis, the said certificate has no evidentiary value whatsoever and at best, it can be taken as merely inferential. If the duty incidence had not been passed on, the same should have been recorded as amounts due from the customs department in the receivables account. It is an admitted position that the records maintained did not reflect the duty paid on the raw materials as the amount due/receivable from the department. In the absence of such an evidence, an inference drawn by the Cost Accountant cannot be said to be reasonable rebuttal of the statutory presumption of passing on of the duty incidence. Whenever a question of fact is to be proved, the same has to be established by following the process known to law. I do not find any such establishment of fact by the appellant in the present case. - appellant has not discharged the statutory obligation cast on him of rebutting the presumption of unjust enrichment in any satisfactory manner acceptable to law. In this view of the matter, I agree with Hon'ble Member (Technical) that the appellant has not crossed the bar of unjust enrichment and therefore, not eligible for the refund. - Decided against assessee.

Summary

Issues Involved:
1. Inclusion of barge charges in the assessable value for customs duty.
2. Applicability of unjust enrichment for refund claims.
3. Limitation period for filing refund claims.
4. Authority of the reviewing authority to go beyond the show-cause notice.
5. Refund claims related to stevedoring charges.
6. Change in contractual terms post-1998 affecting assessable value.
7. Finalization of provisional assessments and its impact on refund claims.

Detailed Analysis:

1. Inclusion of Barge Charges in Assessable Value:
The appellant contested the inclusion of barge charges in the assessable value for customs duty. Initially, the Tribunal upheld the inclusion of these charges for the period January 1995 to January 1997. However, the Hon'ble Apex Court later ruled that barge charges were not includible in the assessable value of imported goods, ordering the refund of any duty collected on these charges with statutory interest.

2. Applicability of Unjust Enrichment:
The appellant argued that the bar of unjust enrichment was not applicable as the selling prices were market-driven and they were operating at a loss. They supported their claim with certificates from Chartered and Cost Accountants. The Adjudicating Authority accepted this and sanctioned the refund. However, the Commissioner (Appeals) rejected the refund, citing the principle of unjust enrichment as upheld by the Hon'ble Apex Court in the case of Sahakari Khand Udyog Mandal Ltd. The Tribunal ultimately held that the appellant had passed the bar of unjust enrichment since the selling price was less than the cost of production.

3. Limitation Period for Filing Refund Claims:
The appellant claimed that since the duty was paid under protest, the limitation period should not apply. The Tribunal agreed, stating that the refund claims were not barred by limitation due to the protest letters filed by the appellant.

4. Authority of Reviewing Authority to Go Beyond the Show-Cause Notice:
The Tribunal held that the reviewing authority could not go beyond the scope of the issues raised in the show-cause notice. The review should be limited to the points arising out of the decision or order of the Adjudicating Authority. This principle was supported by case law, including CCE vs. Carrier Aircon Ltd. and CCE vs. Eastern Aeromatics P. Ltd.

5. Refund Claims Related to Stevedoring Charges:
The Commissioner (Appeals) noted that the Hon'ble Apex Court's order did not cover stevedoring charges, and thus, the refund for these charges was not justified. The Tribunal upheld this view, stating that the appellant had not contested the inclusion of stevedoring charges in the assessable value.

6. Change in Contractual Terms Post-1998:
The revenue argued that post-1998, the contractual terms changed, making the supplier responsible for delivering goods to Dharamtar port, which could affect the assessable value. The Tribunal remanded this issue to the original authority to examine the contracts post-1998 and determine if the terms justified the inclusion of barge charges in the assessable value.

7. Finalization of Provisional Assessments:
The Tribunal found that the provisional assessments were not finalized with a speaking order, and the protest letters were not discharged. Therefore, the assessments could not be considered finalized, supporting the appellant's claim for refunds.

Majority Order:
The appeals were ultimately dismissed based on the opinion of the Third Member, who agreed with the Hon'ble Member (Technical) that the appellant had not discharged the burden of proving that the incidence of duty had not been passed on, thereby upholding the principle of unjust enrichment.