2008 (8) TMI 105 - HC - Customs

Refund - excess duty paid respondent had collected only the contracted amount as evident from the ledger, the invoice and the contract - finding of the Commissioner that the total amount received by the respondent also included the amount of customs duty on the goods at the time of importation was clearly without any basis - it was evident that the refund of excess amount of duty paid by the appellant was beyond the contracted price. Consequently, refund was rightly allowed by tribunal

Summary

Issues:
Classification of imported goods under Customs Tariff Heading, Refund of excess customs duty paid, Passing on the duty incidence to the buyer

Classification of Imported Goods:
The respondent imported CCTV systems for supply and installation of a DTS system and classified them under Customs Tariff Heading 8530.80. The Assessing Officer disagreed and classified them under Heading 8531.10, resulting in the payment of additional customs duty of Rs 4,43,496. The respondent challenged this classification, and it was later accepted that the correct classification was under Heading 8530.80. Consequently, the respondent filed a refund application for the excess duty paid.

Refund of Excess Customs Duty:
The Deputy Commissioner (Refund) allowed the refund application but directed that the amount be credited to the Consumers Welfare Fund, stating that the duty incidence had been passed on to the buyer, Air Headquarters. The Tribunal found that the contracted price did not include the customs duty amount and that the excess duty paid was beyond the contracted price. Therefore, the Tribunal directed that the refund be made to the respondent as the excess duty was absorbed by them and not passed on to the buyer.

Passing on the Duty Incidence to the Buyer:
The Tribunal concluded that the excess duty paid was not passed on to the buyer, as the contracted price remained the same despite the change in classification of the imported goods. The High Court upheld the Tribunal's decision, stating that since the respondent did not increase the contracted price after paying the excess duty, it was evident that the duty incidence was not passed on to the buyer. Therefore, the respondent was entitled to the refund of the excess duty paid.

In conclusion, the High Court dismissed the appeal, stating that no substantial question of law arose for consideration. The Court upheld the Tribunal's decision, emphasizing that the excess duty paid by the respondent was not passed on to the buyer, making them eligible for the refund.