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2019 (2) TMI 693 - AT - CustomsPrinciples of unjust enrichment - Refund of duty credited to Consumer Welfare fund - goods captively consumed - it was alleged that appellants have not proved that the burden of duty was not passed on to customers - Held that - It is true that the concept of unjust enrichment extends not only to the goods which are traded but also to goods which are captively consumed by the claimant in the manufacture of products. The duty element can be indirectly passed on to the customers by including their duty in cost of production. In the facts of the present case, on the basis of the CA certificate produced by the counsel for the appellant before the bench backed by the balance sheet and other documents, it is clear that appellant has not included customs duty element (CVD and SAD) on the goods imported in the cost of their manufacture and has only accounted for them as amounts receivable in their books of accounts - thus, the appellant has not passed on the burden of customs duty claimed and therefore they are entitled to refund of the same. The impugned order is modified to the effect that the refund amount shall instead of being credited to the Consumer Welfare Fund be paid to the appellant - appeal allowed - decided in favor of appellant.
Issues:
Refund of customs duty - Unjust enrichment - Exemption notification - Captive consumption - Appeal against Order-in-Appeal - Burden of proof. Analysis: The appeal was filed against Order-in-Appeal No. VIZ-CUSTM-000- APP-053-17-18 dated 28.12.2017. The appellant, engaged in manufacturing fertilizers including Bentonite Sulphur, imported Sulphur in liquid form for production. They initially imported 6000 MT of Sulphur, claiming exemption for 4500 MT for Bentonite Sulphur manufacturing and later sought exemption for the remaining 1500 MT intended for trading but later used for Bentonite Sulphur. Refund of duty was sought after re-assessment, which was initially credited to the Consumer Welfare Fund due to unjust enrichment concerns. The first appellate authority upheld this decision, citing Solar Pesticides Pvt Ltd case law on unjust enrichment even for captively consumed goods. The appellant provided a CA certificate stating non-passing of duty burden to customers, supported by balance sheets and cost sheets, arguing for refund. The departmental representative supported the lower authority's decision based on Solar Pesticides Pvt Ltd case law, emphasizing the indirect passing of duty burden to customers through cost of production. They referenced Modipon Fibre Co. case law on pricing determinants and profit margins. The Tribunal, after considering arguments and records, acknowledged the principle of unjust enrichment applying to captively consumed goods. However, based on the CA certificate, balance sheets, and documents presented by the appellant, it was concluded that the duty burden was not passed on to customers, justifying the refund. The impugned order was modified to direct the refund amount to the appellant instead of the Consumer Welfare Fund, ruling in favor of the appellant's entitlement to the refund. In conclusion, the Tribunal's decision focused on the specific factual matrix of the case, emphasizing the evidence provided by the appellant to establish non-passing of duty burden to customers. The legal principles of unjust enrichment were considered, but the Tribunal's ruling was based on the appellant's documentation proving the non-inclusion of customs duty in the cost of production. The appeal was disposed of in favor of the appellant, directing the refund to be paid to them instead of being credited to the Consumer Welfare Fund.
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