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TMI Blog2000 (2) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... to this question whether the incidence of duty had not been passed on by the respondent. This appeal is, accordingly, allowed and the impugned judgment of the High Court is set aside, the effect of which would be that the writ petition filed by the Solar Pesticide Pvt. Ltd. stands dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... facturer or importer of goods shall not be entitled to refund of duty of excise or, as the case may be, the duty of Customs, if he has already passed on the incidence of such duty to the buyer. The burden of proof that the incidence of the duty has not been passed on to the buyer shall be on the person claiming the refund. The High Court, on interpreting Sections 27, 28C and 28D of the Act, came to the conclusion that the question of unjust enrichment would not arise in the case of captive consumption of the imported raw material. According to it, the question of unjust enrichment would arise under the amended act when refund is asked for by a person who has sold the imported goods and, in the process, had directly passed on the burden of duty to the buyer. This, according to the High Court, was clear from clauses (a), (b) & (c) of the proviso to Section 27(2) read with the presumption contained in Section 28D of the amended Act. 6. In this appeal, there is no dispute with regard to the question as to whether the respondent was entitled to get the benefit of the exemption notification with regard to the payment of the countervailing duty. We, therefore, proceed on the assumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other person : Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section and the same shall be dealt with in accordance with the provisions of sub-section (2) : Provided further that the limitation of one year or six months, as the case may be, shall not apply where any duty and interest, if any, paid on such duty has been paid under protest. Provided also that in the case of goods which are exempt from payment of duty by a special order issued under sub-section (2) of Section 25, the limitation of one year or six months, as the case may be, shall be computed from the date of issue of such order. Explanation I. - For the purposes of this sub-section, the date of payment of duty and interest if any, paid on such duty, in relation to a person, other than the importer, shall be construed as "the date of purchase of goods" by such person. Explanation II. - Where any duty is paid provisionally under Section 18, the limitation of one year or six months, as the case may be, shall be computed from the date of adjust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ull incidence of such duty to the buyer of such goods." 10. The validity of Section 27 of the Act and the interpretation of the same came up for consideration before this Court in Mafatlal's case (supra). While upholding the validity at page 631, it was observed that "the situation in the case of captive consumption has not been dealt with by us in this. We leave that question open". It is this question which has now come up for consideration in the present appeals. 11. The first proviso to Section 27(1) deals with cases where application for refund had been made before the commencement of the Central Excise and Customs Laws (Amendment) Act, 1991. According to this proviso, such an application for refund shall be dealt with in accordance with the provisions of sub-section (2). In the present bunch of cases, we are concerned with the import of raw material where payment of duty had been made and applications for refund were made prior to the commencement of the Amendment Act, 1991. All such applications are required to be dealt with in accordance with the provisions of sub-section (2) of Section 27 of the Act. 12. Sub-section (1) of Section 27 of the Act provides f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he scheme of the amending provision should be considered as a whole and Section 27 of the Act should be construed harmoniously with Section 28D of the Act. It was contended that it could not have been the intention to provide for a presumption only in respect of one type of refund and not the other, because the need for presumption would be greater in the case of captive consumption as against re-sale of imported goods as such. The absence of presumption, therefore, it was submitted, leads to an inference that the provisions of unjust enrichment were not intended to apply to cases of captive consumption. 16. We are unable to agree with the aforesaid submission of learned Counsel. Section 27 of the Act is, in a sense, complete code by itself, dealing with the claim for refund of duty. The procedure provided by Section 27(1) is applicable in case of application for refund being filed after the said section was amended. Sub-section (1) itself requires a person making an application for refund to furnish documents and evidence (including the documents referred to in Section 28C) to establish that the amount of duty, in respect to which refund is claimed, was collected or paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t been passed on to any other person, then by virtue of proviso to Section 27 (2) of the Act in the case where application for refund had been made prior to 1991, refund due on the duty paid would be given to the applicant. 19. Even though in Mafatlal's case (supra) the question with regard to captive consumption was left open, this Court was called upon to interpret Section 27 of the Act. After discussing and deciding the various contentions which had been raised, the majority judgment of Jeevan Reddy, J. under para 108 at page 631 for the sake of convenience set out the propositions which flowed from the judgment. With regard to claim for refund, at page 633 it was observed as follows : "(iii) A claim for refund, whether made under the provisions of the Act as contemplated in proposition (i) above or in a suit or writ petition in the situations contemplated by proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to the extent he has not so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded that in cases of captive consumption of imported goods, it would be impossible for the assessee to establish whether the duty component has been passed on to the buyers of the finished products or has been borne by the importer himself. Difficulty in proving that the incidence of the duty borne by the importer has not been passed on to the purchaser of the finished product can be no ground for interpreting Section 27 differently. It is not possible that in no case will an importer not be able to prove that the incidence of the duty imposed on the imported raw material has not been passed on to any other person. In fact in Civil Appeal No. 4381 of 1999 filed by the Commissioner of Customs against M/s. Surya Roshni Limited, the importer had produced certificate from the Chartered Accountants giving details of costing of the final product and the Commissioner (Appeals) found as a fact that the component of excess customs duty paid on the imported raw material had not gone into the costing of the finished product. Without going into the correctness of this finding we wish to emphasize that even in cases of captive consumption, it should be possible for the importer to show and pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight in presuming that the burden of tax had been passed on to the customer. This Court further held on facts that the question of appellant therein passing on the tax liability to the consumer did not arise. This case, therefore, can be of no assistance to the respondent. 24. For the aforesaid reasons, we hold that the High Court has not correctly interpreted the relevant provisions of the Customs Act and, in our opinion, the principle of unjust enrichment incorporated in Section 27 of the Act would be applicable in respect of imported raw material and captively consumed in the manufacture of a final product. Whether the incidence of the duty had been passed on to the consumer was not decided by the High Court in Solar Pesticide's case (supra) because in its opinion the principle of unjust enrichment could not apply to the cases of captive consumption. In the case of Solar Pesticide Pvt. Ltd., therefore, we do not go into this question whether the incidence of duty had not been passed on by the respondent. This appeal is, accordingly, allowed and the impugned judgment of the High Court is set aside, the effect of which would be that the writ petition filed by the Solar Pesti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal did not go into the question whether in fact there would be unjust enrichment in the event of refund being ordered to be paid. This question requires adjudication by the Tribunal. For the reasons stated above, the decision of the Tribunal in Solar Pesticides (India) Limited that the principle of unjust enrichment does not apply to the cases of captive consumption is obviously incorrect. We, therefore, allow this appeal, set aside the judgment of the Tribunal and direct it to decide the appeal of the Revenue afresh on the question as to whether the principle of unjust enrichment would, on facts, apply or not. Civil Appeal No. 2711 of 1999 28 In view of the decision of this Court in Civil Appeal No. 921 of 1992, we allow this appeal, set aside the judgment of the Tribunal and direct it to decide the appeal of the Revenue afresh on the question as to whether the principle of unjust enrichment would, on facts, apply or not. Civil Appeal No. 6113 of 1999 29. In a claim for refund of duty, the respondent raised two contentions. Firstly that the duty had not been passed on to the consumer and the principle of unjust enrichment did not apply. The second contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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