2019 (2) TMI 1256 - AT - Customs

Refund of SAD - Unjust enrichment - rejection of refund on the ground that the burden of proof of having borne the incidence of 4% of special additional duty on import of steel rails had not been discharged - Held that - The test of exclusion from receivables is meaningless without examining the corresponding entry for goods lying unsold and the logical trajectory of the lower authorities is patently erroneous. It is admitted that all the goods were not sold in the year of import and no evidence is on record to controvert this finding. Accordingly, the inclusion of the said amount in the balance sheet for the financial year 2008-09 suffices to establish that the burden of special additional duty had not been passed on to the buyers in the preceding years. Denial of refund not justified - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Rejection of refund claims based on burden of proof for special additional duty on import of steel rails.

Analysis:
The appeal pertains to the rejection of refund claims by M/s Ashish Steel against the order-in-appeal of the Commissioner of Customs (Appeals), Mumbai. The dispute revolves around the rejection of one claim filed on 11th March 2008 and five claims filed on 23rd June 2008 concerning the incidence of 4% special additional duty on the import of steel rails. The impugned order upheld the rejection on the grounds that the burden of proof regarding the duty payment had not been met. The imported goods were sold over the financial years 2007-08 and 2008-09, with imports occurring towards the end of 2007-08.

The appellant's counsel argued that the conclusion of passing on the duty burden was solely based on the inclusion of the claimed amount in 'receivables' in the 2008-09 balance sheet. It was contended that this inclusion did not necessarily imply recovery from customers in the year of import. The Authorized Representative, on the other hand, supported the findings of the impugned order.

The Tribunal observed that the lower authorities had erred in considering the 'receivables' head as the unique test for determining the passing on of duty burden. It was highlighted that a balance sheet is prepared from ledger accounts following double entry book-keeping principles. In the context of this case, the 'receivables' could only increase by reducing the value of unsold stock, indicating that the duty burden remained with the goods until sold. Since not all goods were sold in the year of import, the inclusion of the amount in the 2008-09 balance sheet was insufficient to prove passing on of the duty burden in preceding years. Consequently, the denial of refund was deemed incorrect in law.

Therefore, the Tribunal set aside the impugned order and allowed the appeal, providing consequential relief to the appellant. The judgment was pronounced on 17/01/2019 by the Tribunal.