2019 (9) TMI 716 - AT - Customs

Refund in cash - unjust enrichment - refund claim amounts in cash which have been ordered to be credited to the Consumer Welfare Fund on the ground that the appellants were not able to discharge the burden of unjust enrichment - HELD THAT - The comparative analysis of prices, in a situation of change in the tax rates, is absolutely important to decide whether the additional tax burden in situation of increase in tax rates is being shifted to the buyer or not. This also has to be the important parameter to determine whether in a given situation whether there is a presence of unjust enrichment or not. We find that in the case at hand, the prices (both dealer price and RSP) indicate that the burden of enhanced rate of CVD has not been shifted to the buyers and, therefore, there cannot be any element of unjust enrichment. Hon ble Supreme Court in the case of Commissioner of Customs New Delhi vs. Organan (India) Ltd. 2008 (9) TMI 62 - SUPREME COURT , wherein the Hon ble Apex Court has held that if there is no change in the price post levy of duty and the Auditors certifies that the incidence of duty has not been passed to the customers, in that case, it can safely be presumed that since the duty burden has not been passed on to the customers and therefore, the question of unjust enrichment does not arise. Thus, the element of unjust enrichment are not present in the matter at hand. Fulfillment of requirement as prescribed u/s Section 28C and 28D of Customs Act, 1962 - HELD THAT - The provision of Section 28C and 28D of Customs Act are presumptive provisions and once the importer assesse submits his claim that he has submitted the required sales invoices etc. it is on the part of the Department to establish that assessee has not passed the burden of enhanced duty on the customers. In this case we find that all the invoices, purchase and sales invoices have been submitted to the Department and Deputy Commissioner in his report dated 19 February 2018 has reported that burden of enhanced duty has been borne by the appellant and there is no element of unjust enrichment. Thus, the appellant has fulfilled this responsibility as cast by Section 28C and 28D of Customs Act, 1962 and Department has failed to establish any element of unjust enrichment. Thus, the appellants have been able to establish beyond doubt that burden of enhanced CVD has not been passed down to the buyers and therefore, the element of unjust enrichment is not present in this case, thus, the subject refunds are admissible to the appellants - the impugned order in appeal under challenge is devoid of any merit and deserves to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Validity of the refund claims within the limitation period.
2. Applicability of exemption notification No. 12/2012-CE to imported goods.
3. Requirement of separate re-assessment proceedings post 08.04.2011.
4. Applicability of the SRF Ltd. judgment.
5. Examination of unjust enrichment.

Issue-wise Detailed Analysis:

1. Validity of the refund claims within the limitation period:
The appellants' refund claims were initially rejected on the grounds that they were incomplete and not filed within the prescribed time limit under Section 27 of the Customs Act, 1962. However, the Commissioner (Appeals) held that the refund applications were proper and within the limitation period. The rejection of the refund claims on the grounds of incomplete application was deemed unsustainable.

2. Applicability of exemption notification No. 12/2012-CE to imported goods:
The appellants argued that they were entitled to a reduced rate of excise duty under Notification No. 12/2012-CE for the purpose of CVD on imported goods. The department had denied this benefit, asserting that the exemption was not applicable to imports. The Commissioner (Appeals) found this denial unsustainable, stating that the intention of the government was to boost domestic production and levy higher duty on imported mobile phones, but this did not justify denying the exemption.

3. Requirement of separate re-assessment proceedings post 08.04.2011:
The Commissioner (Appeals) held that the refund claim was maintainable and there was no requirement for separate re-assessment proceedings post 08.04.2011. This finding was not challenged by the department and attained finality.

4. Applicability of the SRF Ltd. judgment:
The judgment of SRF Ltd. was deemed squarely applicable to the present case. The Supreme Court had held that the reduced rate of excise duty would apply to CVD for imported goods, as the question of availing Cenvat Credit did not arise for imports. Consequently, the appellants' refund claims were based on this judgment.

5. Examination of unjust enrichment:
The primary issue was whether the appellants had passed on the burden of CVD to their customers, which would disqualify them from receiving the refund due to the principle of unjust enrichment. The Commissioner (Appeals) and the Deputy Commissioner had conflicting reports on this matter. The appellants provided Chartered Accountant certificates, balance sheets showing the refund amounts as receivables, and sales invoices indicating that the sale prices did not increase with the higher CVD rates. The Tribunal found that the appellants had successfully demonstrated that the burden of CVD was not passed on to the customers, thus overcoming the bar of unjust enrichment. The Tribunal relied on various case laws and the Chartered Accountant's certificates to conclude that the appellants were entitled to the refunds claimed.

Conclusion:
The Tribunal allowed the appeals, holding that the appellants had established that the burden of enhanced CVD had not been passed on to the customers, thus there was no unjust enrichment. The impugned order was set aside, and the refunds were deemed admissible to the appellants with consequential benefits.