2016 (1) TMI 828 - AT - Customs

Refund - unjust enrichment - finalization of provisional assessment u/s 19 - Scope of Section 27 - adjudicating authority sanctioned the said refund claims but credited the same to Consumer Welfare Fund as the appellant failed to prove that the duty element was borne to themselves and was not transferred or passed on to their customers. - Held that - Since it has been held per incuriam the bar of Unjust Enrichment would apply to duties paid under protest. Since in the instant case the duties have been paid under protest the bar of Unjust Enrichment would apply. Mere production of copy of ledger account showing refund amount as customs duty paid under protest is not sufficient to establish that they have not passed on the burden of duty to their customers. On examination of the C.A. certificate submitted by the appellant, along with ledger and journal, both certified by the CA, it is seen that the claim of the appellant is based on assertion that the said amount is shown as recoverable from the Govt. in their Balance-sheet. Balance sheet have not been produced. Alongwith the said certificate also two documents are attached which appear to be copy of the Journal and ledger, both certified by the CA. While a certificate claims that these amounts are shown as amount recoverable from the Customs authorities against duty paid under protest, the Journal and ledger only records details of cheques and duty paid under protest. No where referred in the ledger records that the said amounts are recoverable from government. The Ledger or Journal simply records the entries as Duties Paid under Protest. There is no basis of claim that the same are recoverable from the Customs. No sales invoices or other documents have been produced to original adjudicating authority to substantiate the claim of not passing the burden of duty to the clients. - Appellant / assessee failed to prove its case - Refund not allowed - Decided against the assessee.

Summary

Issues Involved:
1. Refund claims and unjust enrichment.
2. Application of Section 27 of the Customs Act.
3. Provisional assessment and finalization under Section 18 of the Customs Act.
4. Distinction between duty paid under protest and provisional assessment.
5. Burden of proof and Chartered Accountant certificate.

Issue-wise Detailed Analysis:

1. Refund Claims and Unjust Enrichment:
The appellants filed two refund claims which were sanctioned by the adjudicating authority but credited to the Consumer Welfare Fund. The reason was the appellants' failure to prove that the duty element was borne by themselves and not transferred to their customers. The Commissioner (Appeals) upheld this decision. The refund claims arose from the Hon'ble Supreme Court's decision in Civil Appeal No. 2495 of 2001, which set aside the CEGAT order and granted the benefit of exemption under Notification Nos. 150/90-Cus and 204/92-Cus.

2. Application of Section 27 of the Customs Act:
The appellants argued that the assessment was provisional and thus, the provisions of Section 27 of the Customs Act relating to refund were not applicable. They relied on the Supreme Court decision in Commissioner Vs. Allied Photographics India Ltd., which stated that any refund arising from the finalization of provisional assessment is not governed by Section 11B of the Central Excise Act.

3. Provisional Assessment and Finalization under Section 18 of the Customs Act:
The Tribunal in Oriental Export Vs. Commissioner of Customs, New Delhi, held that the doctrine of unjust enrichment does not apply to provisional assessments under Section 18 of the Customs Act, similar to Rule 9B of the Central Excise Rules. This decision was upheld by the Supreme Court in Commissioner Vs. Oriental Exports.

4. Distinction between Duty Paid Under Protest and Provisional Assessment:
The Supreme Court in Commissioner Vs. Allied Photographics India Ltd. differentiated between "duty paid under protest" and "duty paid provisionally." It was held that refunds of duty paid under protest are subject to Section 11B, including the bar of unjust enrichment. The case of Sinkhai Synthetics & Chemicals Pvt. Ltd., which held that unjust enrichment does not apply to duties paid under protest, was declared per incuriam.

5. Burden of Proof and Chartered Accountant Certificate:
The appellants submitted a Chartered Accountant certificate stating that the amount was shown as recoverable from Customs against duty paid under protest. However, the Tribunal noted that mere production of a ledger account or CA certificate is insufficient to establish that the duty burden was not passed on to customers. The CA certificate and accompanying documents did not substantiate the claim that the amounts were recoverable from the government. The burden of unjust enrichment can only be discharged with concrete evidence, which the appellants failed to provide.

Conclusion:
The Tribunal dismissed the appeals, emphasizing that the refunds arising from the finalization of provisional assessments are subject to the provisions of Section 27 of the Customs Act and the bar of unjust enrichment. The evidence provided by the appellants was deemed insufficient to prove that the duty burden was not passed on to their customers.