CHARTERED ACCOUNTANT’S CERTIFICATE

[Mr. M. GOVINDARAJAN]

A Chartered Accountant issues a certificate on the basis of the records placed before him by his client.   Such a certificate should be self contained.   Otherwise it should be accompanied by the necessary documents to satisfy the departmental authority. The certificate issued by a Chartered Account is much helpful in the case of refund of duty in indirect taxes.

In the following circumstances the certificate issued by a Chartered Accountant is admissible as per the decisions of Tribunals:

In ‘Monarch Pipes Limited V. Commissioner of Central Excise, Triupati’ – 2009 (11) TMI 682 - CESTAT BANGALORE the Tribunal held that while on the perusal of the certificate issued by the Chartered Account, each and every page has been signed by him.   He has given a certificate after verification of the accounts, which should have been considered by the Adjudicating Authority in proper perspective.   Certificate cannot be rejected merely because on ground that no worksheet was attached with it.

In ‘Commissioner of Central Excise, Poona Bottling Company Limited’ – 2005 (2) TMI 145 - SUPREME COURT OF INDIA the Chartered Accountant of the assessee had certified that the cost of production had not been passed on under the Head of increased crate hire charges.   The Tribunal acted on the Chartered Accountant’s certificate in view of the fact that the departmental authorities had not questioned the same.   The Supreme Court was of the view that this issue need to be reconsidered in the light of facts actually prevailing for the period in question on the basis of such evidence as may be adduced by the parties.

In ‘Commissioner of Central Excise, Ahmedabad – IV. Parle International Limited’ – 2013 (4) TMI 75 - CESTAT AHMEDABAD the Tribunal found that the Chartered Accountant’s certificate gave the details of amounts paid under protect.   The assessee also produced a statement showing the amount paid and refund received. The disputed amount shown the statement tallied with the amount shown in the balance sheet.   Similarly after the refund was received the balance was worked out by the Chartered Accountant in the statement attached to his report tallied with the balance sheet.   It shows that the amount was not collected as part of the duty showing in the invoices but was paid under protest during the course of investigation and after the investigation would show that the appellants could not have collected this amount from the customers.   This aspect along with the review of balance sheet and the Chartered Accountant’s certificates taken together would show that the respondent has discharged the obligation cast on him to show that there was no unjust enrichment in this case.

In ‘RCC (Sales) Private Limited V. Commissioner ‘ – 2007 (3) TMI 193 - CESTAT, BANGALORE the Tribunal held that the Chartered Accountant’s certificate stating that the excess duty paid by the appellants therein had not been passed on to its customers had to be accepted since the revenue had not challenged the certificate.

In ‘Commissioner V. Flow Tech Power’ – 2006 (1) TMI 37 - HIGH COURT OF JUDICATURE (MADRAS) it was held that the Chartered Accountant’s certificate and Profit and Loss Account had shown that the duty paid on goods impugned had been absorbed by assessee.   The duty has been shown as expenditure in Profit & Loss Account and had not been passed on the consumers.

In the following circumstances the Tribunals held that the certificates issued by the Chartered Accountants are not admissible:

In ‘Krohne Marshal Limited V. Commissioner of Customs, Airport, Mumbai’ – 2009 (10) TMI 658 - CESTAT MUMBAI the question arised is as to whether the assessee succeeded in showing that the incidence of duty paid by them on the imported components had not been passed on to the buyers.   In this regard they produced a Chartered Accountant’s certificate which pertains to the bill of entry dated 3.10.2000 on which duty of Rs.54,517/- was passed.   This certificate declares that ‘M/s Krohne Marshall Limited have not passed on the burden of excess duty paid on the above consignment to their customer’.   It also declares that ‘the theory of unjust enrichment does not apply in this case’.   The Tribunal held that there is no mention of quantum of excess duty paid, nor is there any reference, in this certificate to the statutory documents on the basis of which this certificate was issued.   Such a certificate cannot be admitted in evidence.

In ‘Commissioner of Customs, Mumbai V. Larsen & Toubro Limited’ – 2008 (11) TMI 448 - CESTAT, MUMBAI the Chartered Accountant’s certificate has mentioned the duty paid by M/s Larsen & Toubro Limited on the line pipe in destinated area.   It further mentioned that the amount is to be recoverable from the customs authorities and shown under Schedule G of the balance sheet.   But from the extracts of the balance sheet submitted by M/s L&T it is found that nowhere it has been mentioned that the amount is recoverable from the customs authorities.   The
Tribunal held that it is the ‘incidence of duty’ and not the duty of customs as such which is required to be shown to have not passed on from sales record/contract price and this requirement appears to have not been fulfilled to the satisfaction as laid down in Section 27 of the Customs Act. The Tribunal was of the view that the amount shown as recoverable in the balance sheet and the Chartered Accountant certificate are not conclusive proof of having not passed on the incidence of duty.

In ‘Charu Home Products Private Limited V. Commissioner of Customs (Import), Nhava Sheva’ – 2009 (6) TMI 355 - CESTAT, MUMBAI the Chartered Accountant’s certificate certified that ‘M/s Charu Home Products Private Limited have not passed on/or recovered the excess duty paid on Bill of Entry No. 862081, dated 08.08.2006 from M/s Kan-Kan to whom the sewing machines have been sole.   Hence M/s Charu Home Products Private Limited apparels will not be unjustly enriched if the refund is granted to them’. The lower authority considered that these documents did not constitute adequate evidence against the bar of unjust enrichment.   The Tribunal held that the Certificate of Chartered Accountant did not disclose any basis whatsoever.   Such a certificate should be based on accounts and accounting practices/principles.   None of this is discernible from these documents.   The Tribunal upheld the order of lower authority.

In ‘Bhoruka Textiles Limited V. Commissioner of Central Excise, Belgaum’ – 2004 (7) TMI 580 - CESTAT, BANGALORE the veracity of the Chartered Accountant’s certificate is not established as the Chartered Accountant’s certificate is dated 25.11.2002 certifying the position on 25.3.1994 shown by bank statement and submitted to the bank on 30.4.1994. Bank statement submitted to the banker is uncertified and unsigned.   The Tribunal did not find any merit in the appeal and rejected the same.

In ‘Commissioner V. Toyota Kirloskar Motors Limited’ – 2009 (12) TMI 529 - KARNATAKA HIGH COURTit was held that the Chartered Accountant’s certificate is not enough evidence to show that there was no unjust enrichment.