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TMI Blog2014 (11) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in question. Accordingly, proceedings were initiated against them resulting in passing of an order passed by the adjudicating authority holding against them. However, it is seen that said order of the adjudicating authority was set aside by Commissioner (Appeals) who held that the respondents are eligible for benefit of notification. 2. On receipt of order of Commissioner (Appeals), appellant filed a refund claim of duty of Rs. 35,91,820/- paid by them at the time of clearance of imported goods, under protest. 3. It is seen that said order of Commissioner (Appeals) was challenged by the Revenue before the Tribunal and Tribunal vide its final order No. C/310/08 rejected the appeal filed by the Revenue by holding that the assessee was entitled for exemption in terms of notification in question. It was also observed by the Tribunal that duty was paid by the assessee at the time of clearance of the goods, under protest. For better appreciation, we reproduce the relevant part of the said order. 3. When the matter was heard on earlier occasions, we directed the Departmental Representative to produce the original clearance documents to see whether the claim of the importer that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have already observed the question required to be decided in the present appeal is as to whether the duty paid by the assessee at the time of import of goods stand collected by them from their buyers so as to make themselves unjustly enriched. The appellants have strongly relied upon the certificate of Chartered Accountant. We are reproducing the same for better appreciation. TO WHOMSOEVER IT MAY CONCERN We have gone through the Purchase, Manufacturing and sales record of M/s. Overseas Business Corporation having its factory at A-30, Sector -16, NOIDA (UP) and after perusal of all above we hereby certify the following: 1. That during April, 2003 to Sep2003, the firm had been importing CD Pick Up Lense Unit at Concessional Rate of Duty of 5%+16%+4% and the cost of Manufacturing per unit of CD Deck Mechanism works out to be Rs. 110.50 per piece as detailed in enclosed chart. The average basic selling price per piece of CD Deck Mechanism during this period was Rs. 130.84 paisa. According the firm was earning a gross margin of 15.55% on its sales value. 2. That during Oct2003 to March2004, the firm had imported CD Pick up Lense Unit at full rate of duty of 25%+16%+4% under p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) has shown the landed cost of CD pick up lense unit as Rs. 109.49 which is inclusive of higher duty paid by them, does not mean that customs duty paid by them at the time of clearance of said pick up lense unit makes an integral component of their final product, which stand sold at the price lower than the manufacturing cost which stands arrived at by then by including the higher landed cost of the imported goods. The appellants have only tried to establish that after the higher duty paid cost of CD pick up lense is added in the manufacturing cost, the same comes to Rs. 123/- which is admittedly higher than the unit sale price of the goods in question. If that be so, the differential duty paid on the imported goods i.e. CD pick up lense unit cannot be said to have been collected by the assessee from their customers. 9.The Commissioner (Appeals) also rejected their claim on the ground that appellant have neither shown the extra amount of duty as recoverable from the department in their balance sheet nor they have brought any other documents to show that duty was not passed on to their customers. We note that an identical reason was advanced by the Revenue before the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t increased whereas retail sale price was decrease. This fact itself reflects upon only one situation that the extra cost of raw material has not been taken into consideration by the importer at the time of fixing its retail sale price. 12. The appellants have admittedly placed on record the Chartered Accountants certificate certifying that differential duty does not stand recovered by the appellant from their customers. Once the importer having discharged this burden, by placing on record Chartered Accountants certificate, the burden gets shifted to the Revenue to prove by production of positive evidence that such extra duty paid by them stand recovered from their customers. In the present case the Revenue has not advanced any evidence so as to effectively rebut the certificate on record. Such certificate having been given by the Chartered Accountant, based upon the books of accounts maintained by the appellant, in the regular course of the their business has to be given true credence and cannot be brushed aside merely on the basis of assumption and presumptions. For the same reasons, the argument of the learned DR that no businessman sells the goods at a price less than the cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HAN SINGH 15. I have gone through the decision and reasons thereof recorded by learned Member (Judicial). I do not agree with findings on the basis of material facts and evidence on record as well as law relating to unjust enrichment, I consider it necessary to record my separate decision in the following paragraphs. 16. Against claim of refund of Additional customs duty of Rs. 35,91,820/- paid on import of input made vide different Bill of Entries during September 2003 to December 2003, held to be exempt from duty in terms of a Notification, by Commissioner (Appeals) vide O-I-A No. CC(A)63/ICD/D-II/06 dated 28,12,2006, the appellant was allowed adjustment thereof towards cenvat credit (MODVAT) to the extent of Rs. 25,28,755/- and balance of Rs. 10,63,065/- was credited to welfare fund on account of bar of unjust enrichment. 17. Being unsuccessful in adjudication, when the appellant came in appeal to learned Commissioner (Appeals), he agreed with the adjudicating authority and found that when landed cost of the input included duty element according to own averment of the appellant and data submitted by the Chartered accountant, that formed part of the cost of the finished goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uded duty element in absence of authentic records produced before authorities below has the appellant sold goods at a price lower than its cost was also not demonstrated before both authorities bellow. Therefore mere plea of sale at loss has no force without evidence well tested by adjudicating authority. The appellant makes pulpable plea without cogent evidence. Therefore there is no scope to disagree with the finding of Commissioner (Appeals). 20. Hon'ble Madras High Court held that substantial evidence settles fact without a mere statement in Chartered Accountants Certificate in following terms: 7. Section 27 of the Customs Act 1962 provides for the claim for refund of duty. A perusal of the said provision would show that the importer will have to satisfy the authorities while seeking such a claim. In other words, until and unless the importer satisfies the authorities with relevant documents, indicating the fact that it has paid the excess amount and the duty has not been passed on to the customers, such a claim cannot be accepted. Further Section 28C and D of the Act provide for price of goods to indicate the amount of duty pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to support that he is entitled to refund. Hence, on a consideration of the above said Judgment and also on the consideration of the facts involved, we are of the opinion that the appeal will have to be allowed and accordingly the same is allowed and the question of law framed is answered in favour of the revenue. 10. Inasmuch as the Tribunal has merely relied upon the certificate of the Chartered Accountant and in order to give sufficient opportunity to first respondent while answering the question of law in favour of the revenue, the order passed by the Tribunal is hereby set aside and the matter is remitted back to the Tribunal for a fresh consideration of the appeal filed before it. The first respondent is permitted to furnish any other substantial evidence in support of his claim for refund. It is made clear that if the first respondent has failed to produce any other evidence, the Tribunal is directed to proceed with the case and decide the same on merits in accordance with law' [Emphasis supplied]. 21. When records of the case reveal that the appellant did not lay any evidence before the adjudicating or first appellate authority to come out of the rigor of unjust enrichm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alls naturally within the important category of cases where the court orders restitution if the justice of the case so requires. 36. The above principle has been accepted in India. This Court in several cases has applied the doctrine of unjust enrichment. 39. Applying the provision of Section 70 of the Contract Act, 1872 and referring to Fibrosa and Nelson, this Court said : ...It is well established that a person who seeks restitution has a duty to account to the defendant for what he has received in the accounting by the plaintiff is a condition of restitution from the defendant. [Emphasis supplied] 23. It is common sense that every business man realize entire cost of manufacture with profit from sale of the goods manufactured through its sale price and no sale price is below the cost. Observation of Apex court in case of Mafatlal Industries Ltd. Vs. Union of India in 1997 (89) ELT 247(SC) in this regard is as under: 'The levy under the Excise Act is an indirect tax (duty). A duty of excise is levied on the manufacture or production of goods. Ordinarily, it is le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly held that no prudent business man would prefer to suffer loss as has been recorded in para 91 of the judgment in case of Mafatlal Industries Ltd. (ibid) as follows: "Ordinarily, no manufacturer will sell his products at less than the cost-price plus duty. He cannot survive in business if he does so. Only in case of distress sales, such a thing is understandable but distress sales are not a normal feature and cannot therefore constitute a basis for judging the validity or reasonableness of a provision. Similarly, no one will ordinarily pass on less excise duty than what is eligible and payable. A manufacturer may dip into his profits but would not further dip into the excise duty component. He will do so only in the case of a distress sale again. Just because duty is not separately shown in the invoice price, it does not follow that the manufacturer is not passing on the duty. Nor does it follow therefrom that he manufacturer is obsorbing the duty himself. The manner of preparing the invoice is not conclusive. While we cannot visualize all situations, the fact remains that, generally speaking, ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice on which such goods are to be sold. Section 28D contains a presumption that incidence of duty has been passed onto the buyer, but this presumption is rebutable. In the absence of proof of such duty not having been passed on to the buyer, Section 28D provides that the passing of such duty by the seller to the buyer shall be deemed to have taken place" Based on aforesaid analysis, I am of the view that the appellant has not been able to pass the rigor of section 27 and the law laid down by Apex Court in Union of India Vs. Solar Pesticides supra. In view of above, I agree with the order of Commissioner (Appeals) Order-in-Appeal No. 299/2008 dated 02.9.2008 and uphold it. Consequently appeal filed by the appellant is rejected. (Manmohan Singh) Member(Technical) K Gupta Diffenrence of Opinion Whether the refund claimed is hit by unjust enrichment as per section 27 of Customs Act as held by Member (Technical) Or is not hit by unjust enrichment as held by Member (Judicial) (Manmohan Singh) (Archana Wadhawa) Member(Technical) Member(Judicial) K Gupta 26.The appellant during September, October, November & December, 2003 imported seven assignments cleared to be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms during July to September period when the duty had been paid at the lower rate was Rs. 130.84 per piece and during the period from Oct.03 to March04 when the duty on imported components - CD Pick up Lense Units had been paid at higher rate, the price of CD Deck mechanisms was Rs. 114.40 per Units and accordingly on this basis, it was claimed that they have not passed on the burden of excess duty whose refund was claimed. The Jurisdictional Assistant Commissioner, however vide Order-in-Original dt.14.09.07 rejected refund claim on the ground that since out of the refund claim of Rs. 35,91,820/- an amount of Rs. 25,28,755/- represents the additional customs duty whose Cenvat Credit has been availed, they are eligible for refund of only the balance amount of Rs. 10,63,065/- and since the appellant failed to furnish evidence that the incidence of this duty had been borne by them, the balance amount was ordered to be credited to the consumer welfare fund. On appeal being filed to Commissioner (Appeals) against this order of the Assistant Commissioner, the Commissioner (Appeals) vide Order-in-Appeal dt. 02.09.08 upheld the Assistant Commissioners Order holding that the appellant hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6% additional customs duty Plus 4% SAD, that during the period from Oct.03 to March'04, when duty on the CD Pick Up Lense Units was being paid at higher rate of 25% BCDPlus16% additional customs duty Plus4% SAD, the appellant had manufactured 1,78,940 pieces of CD Deck Mechanism and had sold the same for a total value of Rs. 204,70,100/- i.e. at average basic sale value of Rs. 114.40 per piece, that this shows that during the period when higher duty had been paid on the main component, the price of CD Deck Mechanisms had decreased, that landed price of other components was the same and the exchange rate was also more or les the same, that from this data, it is clear that the incidence of extra duty paid whose refund has been claimed had not been passed on the customers and incidence of this excess duty paid had been borne by the appellant, that this data was produced before Commissioner (Appeals), but the same was summarily rejected, that Hon'ble Delhi High Court in the case of Hero Motorcorp Ltd. Vs. Commissioner of Customs (Import & General) reported in 2014(302) ELT-501 (Del.) has held that when the importer has produced C.A. Certificate certifying the factual position with doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of duty at higher rate during Oct.03 to March04 the price of CD Deck Mechanism instead of increasing, decreased from the earlier price of Rs. 130 per piece to Rs. 114 per piece and when as per cost data given by the appellant, the price of other inputs had also not decreased, it has to be concluded that the appellant absorbed the incidence of higher duty whose refund is being claimed, instead of passing on the same to their customers, that just because the Appellant Company made some profit during 2003-04, it cannot be inferred that they did not absorbed the higher duty paid on its CD pick up Lense Unit, that the Tribunal in the case of Shakun Overseas Ltd. Vs. Commissioner of Customs, Chennai reported in 2002 (140) ELT-444 has held that when goods were sold at price less than the landed cost and the loss incurred is more or less similar to the duty paid, it has to be concluded that incidence of duty was not passed on to the customers, that Tribunal in the case of Collector of Central Excise, Chandigarh Vs. Metro Tyres Ltd. reported in 1995(80) ELT-410 (Trib.) has held that when sale price of the goods before as well as after the event (re-classification, revaluation etc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004, as a whole the Appellant Company had made a profit. She, therefore, pleaded that the order recorded by the Hon'ble Member (Technical) is correct. 33.I have considered the submissions from both the sides and perused the records. 34.The refund claim for an amount of Rs. 35,31,820/- has arisen in respect of import of seven consignments of CD Pick Up Lense Units during period from 30th Sept.'03 to Dec.'03. Prior to 30th Sept.'03 to 30th Dec.'03 the appellant had imported these goods at the concessional rate of duty of 5% basic customs duty plus 16% additional customs duty plus 4% special additional customs duty (SAD) under exemption Notification No. 25/99-CUS. which is available to an importer subject to condition that the importer used these goods for manufacture of CD Deck Mechanism. Since during period from 30th Sept.'03 to 30th Dec.'03, the Department denied the exemption, appellant paid basic customs duty @ 25% adv. Though the rate of additional customs duty and SAD remain the same, since the additional customs duty and SAD is calculated on the value which is sum of CIF price plus basic customs duty, increase in the rate of basic customs duty would also result in payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention that from this date it cannot be concluded that the incidence of the extra duty paid was borne by the Appellant, is not acceptable, as, as held by Hon'ble Gujarat High Court in the case of Commissioner of Central Excise & Customs Vs. Dhariwal Industries Ltd. (Supra) the sale price of the goods remaining constant inspite of increase in the duty cannot be looked at in isolation but has to be looked at from the angle as to whether sale price has remained constant on account of decrease in the price of raw-material and other inputs or other factors completely un-related to assessee absorbing the higher duty and if such factor are absent, the price remaining unchanged or decreasing inspite of the higher incidence of duty would lead the conclusion that higher incidence of duty had been absorbed by the assessee and not passed on to the customers. I also take note the judgment of Hon'ble Delhi High Court in the case of Hero Motorcorp Ltd. Vs. Commissioner of Customs (Supra) wherein Hon'ble High Court has held that Certificate of C.A. certifying the factual position based on the documents that the duty burden was not passed should normally be believed unless there are grounds and re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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