2018 (1) TMI 1125 - AT - Central Excise

100% EOU - Refund of additional customs duty paid erroneously - rejection on the ground that the appellant is not eligible for the benefit of N/N. 23/2003 and also on the ground of unjust enrichment - Held that - The subject goods were leviable to Sales Tax / VAT and the payment of Sales Tax / VAT was deferred to the point of sale. As there is no exemption from VAT / Sales Tax, per se, the benefit of the notification cannot be denied to them. Unjust enrichment - Held that - appellant argues that the authorities below have assumed that the appellants have passed on the incidence of duty to the customers. That their accounts would show that the duty element has not been passed on to their customers. The appellant has presented an arguable case for reconsideration of the matter. We therefore deem it fit to remand the matter to the adjudicating authority for reconsideration of both the issues - appeal allowed by way of remand.

Summary

Issues:
Refund claim for additional customs duty paid erroneously on DTA clearance; Eligibility for exemption under Notification No.23/2003; Grounds of unjust enrichment.

Analysis:
The appellants, a 100% EOU engaged in manufacturing pad assembly, filed a refund claim for additional customs duty paid erroneously on DTA clearance to their sister unit. The original authority rejected the claim, stating the appellants were not eligible for the exemption under Notification No.23/2003 and failed to establish unjust enrichment. The Commissioner (Appeals) upheld the decision, leading to this appeal.

The appellant's counsel argued that the SAD claimed as refund was paid during stock transfer from EOU to Warehouse and not charged in subsequent sales invoices where sales tax/VAT was applied. The counsel emphasized that the sale price remained consistent, whether goods suffered SAD or not, indicating no duty incidence passed on to customers. The appellant's accounts reflected the duty amount as recoverable from the Government, disputing the unjust enrichment allegation.

After hearing both sides, the Tribunal found merit in the appellant's contentions. It was noted that if goods were exempt from sales tax/VAT, additional customs duty should be included. As there was no exemption from VAT/Sales Tax, the benefit of the notification could not be denied. Regarding unjust enrichment, the tribunal agreed that the duty incidence was not passed on based on the appellant's arguments and account records. Consequently, the matter was remanded to the adjudicating authority for reconsideration of both issues.

In conclusion, the impugned order was set aside, and the appeal was allowed by way of remand to the adjudicating authority, leaving all issues open for further consideration.