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Issues Involved:
1. Applicability of the principle of unjust enrichment to the refund of customs duty. 2. Whether the incidence of customs duty was passed on to the customers. Summary: 1. Applicability of the Principle of Unjust Enrichment: The primary issue in this appeal by M/s. Infar (India) Ltd. was whether the principle of unjust enrichment applies to their claim for a refund of customs duty. The Assistant Commissioner and the Commissioner (Appeals) had denied the refund claims based on the principle of unjust enrichment, holding that the appellants had not provided sufficient documentary evidence to prove that the duty was borne by them and not passed on to the customers. The Commissioner (Appeals) relied on the Supreme Court judgment in Mafatlal Industries v. U.O.I., 1997 (89) E.L.T. 247 (S.C.), which states that merely maintaining the same price and indicating that prices do not include customs duty is insufficient to prove that the duty burden was not passed on. 2. Whether the Incidence of Customs Duty Was Passed on to the Customers: The appellants argued that their sale prices remained constant during the period when customs duty was charged and when it was not, indicating that the duty incidence was not passed on to the customers. They submitted a Chartered Accountant's certificate and an affidavit from their Director to support their claim. The Tribunal, in previous cases like C.C. Chennai v. New Trade Links, 1999 (33) R.L.T 205 (CEGAT), held that if the sales price remains unchanged before and after the imposition of higher duty, it indicates that the incidence of higher duty has not been passed on. The Tribunal allowed the appeal, stating that the appellants are eligible for the refund of the customs duty. Separate Judgment by Member (J): Member (J), Krishna Kumar, disagreed, emphasizing that the burden of proof lies with the appellants to show that the duty was not passed on. He cited the Supreme Court's observation in Mafatlal Industries that ordinarily, no manufacturer would sell products below cost price plus duty. He argued that merely stating in invoices that prices do not include customs duty is insufficient. He also referred to the Solar Pesticides case, which clarified that the incidence of duty on raw materials would be passed on to the purchaser of the finished product. He concluded that the appellants had not shown the amount claimed as refund as recoverable/outstanding in their books of accounts, indicating that the duty burden was passed on, and thus, the appeal should be dismissed. Majority Decision: The third Member (T), K.K. Bhatia, resolved the difference by siding with Member (T), V.K. Agrawal. He noted that the appellants had successfully rebutted the statutory presumption under Sec. 28D of the Customs Act, 1962, by providing evidence such as invoices stating that prices did not include customs duty and Chartered Accountant certificates. He concluded that the incidence of duty had not been passed on to the customers, and the appeal should be allowed. Final Order: As per the majority, the incidence of duty was not passed on by the appellants to the customers, and they are eligible for the refund of the customs duty. The appeal was thus allowed.
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