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2025 (3) TMI 858 - AT - CustomsRefund claim is hit by limitation of time and is therefore liable to rejection or not - principles of unjust enrichment - applicant has proved beyond doubt that the incidence of CVD has not been passed on to the buyers or not. HELD THAT - It is transpired from various decision that when a Certificate of a Chartered Accountant is submitted by an assessee to substantiate that the assessee would not be unjustly enriched then it is for Revenue to establish by evidence that either the Certificate issued by the Chartered Accountant is incorrect or that the duty was actually passed on to the buyers. The decisions also hold that there is no requirement in law that the Certificate should be issued only by statutory auditors for so long as the Certificate is issued by a Chartered Accountant and it is consistent with the accounts such as the Financial Statement the Certificate issued by a Chartered Accountant should be accepted. The decisions also hold that when the differential customs duty is shown as receivables in the Balance Sheet/Financial Statement it would follow that duty has not been passed on to the customers. The decisions also hold that in such a case the legal presumption under section 28 of the Customs Act stands rebutted. A Certificate issued by a Chartered Accountant therefore cannot be lightly brushed aside without there being any cogent evidence to the contrary. In the present case the Commissioner (Appeals) only doubted that the amount of Rs. 1, 67, 88, 778/- was not included in the amount of Rs. 17, 38, 94, 156/- shown in the Books of Account of the appellant. This doubt could have been clarified from the appellant but that was not done. The decision of the Tribunal in Kohinoor India 2014 (11) TMI 192 - CESTAT NEW DELHI on which reliance has been placed by the learned authorized representative appearing for the department holds that mere production of a Certificate of the Chartered Accountant does not ipso facto grant refund to the respondent until material is produced by the assessee to show that burden of duty has not been passed on to the buyers. This decision would therefore not help the department. Conclusion - The appellant had not passed the burden of duty to the customers in respect of the duty paid on the 4 Bills of Entry and was shown as recoverable from the customs department. The impugned order dated 05.07.2021 to the extent it holds that refund amount should be credited in the Consumer Welfare Fund therefore deserves to be set aside and is set aside. The appellant would be entitled to refund of the amount with interest. The appeal is accordingly allowed.
ISSUES PRESENTED and CONSIDERED
The primary issue considered in this judgment was whether the refund amount of Rs. 1,67,79,311/- should be credited to the Consumer Welfare Fund or refunded to the appellant. This involved examining if the appellant had passed the burden of the countervailing duty (CVD) to the buyers, thus invoking the doctrine of unjust enrichment. The secondary issue was whether the refund claim was filed within the prescribed time limit under Section 27 of the Customs Act, 1962. ISSUE-WISE DETAILED ANALYSIS 1. Unjust Enrichment and Refund to Consumer Welfare Fund Relevant Legal Framework and Precedents: The legal framework revolves around Section 28D of the Customs Act, which presumes that the incidence of duty has been passed on to the buyer unless proven otherwise. The appellant must rebut this presumption to claim a refund directly instead of the amount being credited to the Consumer Welfare Fund. Precedents such as the Delhi High Court's decision in Principal Commissioner of Customs vs. Telecare Network (India) Pvt. Ltd., and the Madras High Court's decision in Virudhunagar Textile Mills Ltd. were considered, emphasizing the role of Chartered Accountant certificates and financial statements in rebutting the presumption of unjust enrichment. Court's Interpretation and Reasoning: The Tribunal scrutinized the Chartered Accountant's certificate and the financial statements provided by the appellant. The Tribunal noted that the appellant had shown the excess duty as "Customs Duty Receivable" in their financial statements, indicating that the burden of duty was not passed on to the consumers. The Tribunal also considered the additional certificate dated 31.01.2024, which provided a detailed breakdown of the customs duty receivable, including the disputed refund amount. Key Evidence and Findings: The evidence included the appellant's financial statements for the year ending 31.03.2016, which showed customs duty receivable as Rs. 17,38,94,156/-. The Chartered Accountant's certificates dated 09.04.2018 and 31.01.2024 corroborated that the excess duty was not passed on to the buyers and was accounted for as receivable. The Tribunal found that the Commissioner (Appeals) erred in dismissing these documents without seeking further clarification from the appellant. Application of Law to Facts: The Tribunal applied the principles of unjust enrichment, noting that the presumption under Section 28D was effectively rebutted by the appellant through credible evidence, including the Chartered Accountant's certificate and financial statements. The Tribunal emphasized that the burden of proof shifted to the Revenue to demonstrate that the duty was passed on to consumers, which the Revenue failed to do. Treatment of Competing Arguments: The appellant argued that the Commissioner (Appeals) did not follow the mandatory procedure under Section 128A(3) of the Customs Act and that the findings were contrary to settled law. The department contended that the Chartered Accountant's certificate was insufficient and lacked explicitness. The Tribunal favored the appellant's arguments, highlighting the absence of contrary evidence from the department. Conclusions: The Tribunal concluded that the appellant successfully rebutted the presumption of unjust enrichment. Therefore, the refund amount should not be credited to the Consumer Welfare Fund but refunded to the appellant. 2. Timeliness of the Refund Claim Relevant Legal Framework and Precedents: Section 27 of the Customs Act prescribes the time limit for filing refund claims, generally within one year from the date of payment or re-assessment. Court's Interpretation and Reasoning: The Tribunal agreed with the Assistant Commissioner (Refund) that the refund claim was filed within the prescribed time limit, as the Bills of Entry were re-assessed on 09.02.2018, and the refund application was submitted on 13.03.2018. Conclusions: The Tribunal upheld the finding that the refund claim was timely and not barred by limitation. SIGNIFICANT HOLDINGS The Tribunal's significant holding was that the appellant had successfully rebutted the presumption of unjust enrichment. The Tribunal emphasized that: "A Certificate issued by a Chartered Accountant, therefore, cannot be lightly brushed aside without there being any cogent evidence to the contrary." The Tribunal set aside the Commissioner (Appeals)'s order directing the refund amount to be credited to the Consumer Welfare Fund. The appellant was entitled to a refund of the amount with interest, reinforcing the principle that a Chartered Accountant's certificate, consistent with financial statements, can effectively rebut the presumption of duty incidence being passed to buyers. The appeal was allowed, and the order was pronounced on 17.03.2025.
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