2012 (11) TMI 609 - AT - Customs

Refund in cash - Appellants imported goods and filed two Bills of Entry for home consumption dated 1-9-2005 - Customs EDI systems assessed the Bill of Entry showing Basic Customs Duty at the rate of 7.5%, the Appellants paid Custom duties on the said Bills of Entry based on such assessment - But actually the Customs duty was reduced from 7.5% to 3.75% vide Notification No. 79/2005 which came into force on 1st September 2005 i.e. the date of filing of the Bills of Entry Held that - This is a case of simple mistake in assessment on account of the fact that computer systems of Customs were not promptly updated. Quite often the notification issued on a day and effective from that day is available to officers outside the Ministry and the public only by evening of the day in the next few days - onus is on the appellants to prove that the incidence has not been passed on is not a heavy burden - appellants are eligible for the impugned refund in cash

Summary

Issues:
Import of goods with incorrect duty assessment, refund claim due to duty rate reduction, unjust enrichment principle application for captive consumption, burden of proof on refund claimant.

Analysis:
The case involved the import of aluminum alloy billets with incorrect duty assessment by the Customs EDI systems. The duty rate was reduced from 7.5% to 3.75% via Notification No. 79/2005 effective from the date of filing the Bills of Entry. The importers paid duties based on the initial assessment but later realized the error and filed a refund claim as the final assessment reflected the reduced rate. The Assistant Commissioner sanctioned the refund but credited it to the Consumer Welfare Account, citing the importer's failure to prove non-passing of the duty incidence. The Appellants contended that the Customs department's failure to update the duty rate in their system led to the excess payment, and they did not pass on the incidence to anyone. They provided a certificate from a Chartered Accountant to support their claim.

The Appellants further argued that they repeatedly requested the Customs authorities to update the rates, but were informed that the notification was not received, hence the old rates prevailed. They emphasized that the goods were for captive consumption in their own manufacturing process, and they were aware of the refund eligibility upon taking delivery. The Revenue's representative invoked the principle of unjust enrichment, stating that even in captive consumption cases, the burden of proof lies with the refund claimant as per Section 27 of the Customs Act. They highlighted the lack of evidence such as invoices, balance sheets, and Income Tax returns to demonstrate non-passing of the duty incidence.

Upon considering both sides' arguments, the Tribunal noted that in cases of captive consumption, the incidence cannot be passed on through an invoice. They acknowledged the Appellants' awareness of the refund due to the discrepancy in duty payment. The Tribunal opined that in such situations, where excess payment was evident, there was no need for extensive financial documentation to prove non-passing of the incidence. They emphasized that the burden of proof in such cases is not onerous. The Tribunal concluded that the Appellants were entitled to the refund in cash, as the duty incidence had not been passed on, and ordered accordingly, disposing of the appeal.