2021 (9) TMI 359 - AT - Customs

Refund claim - principles of unjust enrichment - duty of customs was paid @7.5% instead of 5% provisionally - At the time of final assessment, the benefit of notification was extended - Entitlement to preferential rate of BCD - ELD THAT - once it is an admitted fact that duty has been collected in excess from the appellant during pendency of finalization of provisional assessment, the same has to be returned to the assessee once his books of accounts are showing such an excess duty paid as receivable. The same is the sufficient evidence for the fact that incidence of duty has not been passed on by the assessee/manufacturer from the end customers of the product manufactured. The facts of the present case are absolutely in contrast from the decision in the case of HINDUSTAN PETROLEUM CORPN. LTD. VERSUS COMMR. OF CUS. (IMPORTS) , MUMBAI 2015 (2) TMI 1136 - CESTAT MUMBAI . In M/s HPCL case, the assessee had shown the amount as was prayed to be refunded by him, as expenditure in his books of accounts. It has been held in the said decision that once the amount has been shown as expenditure and not as receivables it definitely becomes the case of unjust enrichment. Admittedly, in the present case, the amount in question was shown as recoverable/receivables. The bar of unjust enrichment is therefore held to have wrongly been invoked by the Commissioner (Appeals). As there have been sufficient documentary evidences in the form of books of accounts on record and thus the Commissioner (Appeals) has been held to have wrongly ignored the said document. In addition to those documents, there has been a certificate by the authorized auditor of the appellant produced on record certifying that the amounts as has been prayed to be refunded has been the receivables by the appellant, the incidence thereof has not been passed on to any other person. The said certificate has to be considered as comprehensive proof in respect of the fact that the burden of duty has not been passed on by the appellant to the respondent more so for the reason that the department has not been able to show that the certificate is incorrect or doubtful. The certificate has to be considered as the sufficient evidence to prove that present is in the case of unjust enrichment. Refund allowed.

Summary

Issues:
1. Refund of excess duty paid under provisional assessment.
2. Invocation of principle of unjust enrichment.
3. Interpretation of documentary evidence for duty refund.

Issue 1: Refund of Excess Duty Paid Under Provisional Assessment

The appellant imported Aluminium Nitrate and claimed a preferential rate of Basic Customs Duty (BCD) at 5% under Notification No.46/2011 Entry No. 358(1). Due to the unavailability of the original certificate of origin, provisional assessment was conducted, and duty was paid at 7.5%. The appellant requested a refund of the excess duty paid after submitting the original certificate of origin. The original authority sanctioned the refund, but a review order set it aside, leading to the appellant filing an appeal. The tribunal observed that the appellant was entitled to the refund as the duty was overpaid, and the order setting aside the refund was not sustainable.

Issue 2: Invocation of Principle of Unjust Enrichment

The appellant argued that the principle of unjust enrichment was wrongly invoked by the Commissioner (Appeals) in rejecting the refund. The appellant's Chartered Accountant issued a certificate stating that the duty incidence was not passed on to customers. The tribunal held that the certificate, along with the appellant's books of account showing the amount as recoverable, was sufficient evidence that the duty burden was not transferred. The tribunal differentiated this case from previous judgments where the duty amount was treated as expenditure, emphasizing that in this case, it was shown as receivable, thus dismissing the invocation of unjust enrichment.

Issue 3: Interpretation of Documentary Evidence for Duty Refund

The Commissioner (Appeals) rejected the refund, citing insufficient proof that the duty was not charged to buyers. However, the tribunal found that the appellant's financial statement and the Chartered Accountant's certificate were adequate proof that the duty burden was not passed on. The tribunal emphasized that the books of account were crucial in determining whether the duty incidence was borne by the manufacturer or customers. Relying on precedents, the tribunal concluded that the documentary evidence, including the certificate and financial records, was comprehensive proof that the duty burden was not shifted, leading to the allowance of the appeal and setting aside the order rejecting the refund.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT Hyderabad highlights the issues of refund under provisional assessment, the application of unjust enrichment, and the interpretation of documentary evidence for duty refund, providing a comprehensive understanding of the legal reasoning and conclusions reached by the tribunal.