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TMI Blog2015 (4) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... e includible in the assessable value for the purpose of calculating customs duty, being cost of transportation. This Tribunal confirmed the demand by upholding that for the period January 1995 to January 1997 the said transportation charges are includible. 2.2. The said order was challenged by the appellant before the Hon'ble Apex Court. The show-cause notices were issued to the appellant for demand of customs duty on Barge charges for the period 1994-95 to 1998. This Tribunal on 25.05.2004 held that the said Barge charges are not includible in the assessable value of the imported goods. The said order was challenged by the revenue before the Hon'ble Apex Court. During the pendency of these appeals, the appellant was compelled to pay duty component on Barge charges, which appellant paid under protest. On 29.09.2006, the Hon'ble Apex Court 2006 (202) E.L.T. 561 (SC) held that in no uncertain terms, that the Barge charges were not includible in the assessable value of imported goods. Thereafter the Hon'ble Apex Court ordered as under:- "Any amounts collected by the Revenue as duty on Barge charges shall be refunded forthwith to the assessee with statutory interest f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .e. after six month of duty paid. c) there was no reference or direction by the Hon'ble Apex Court on the duty paid on stevedoring charges on which the customs authorities have confirmed the duty. d) in case of the imports made by the appellant after 1998, it was observed that in many of the import transactions and the facts and circumstances of importation are factually different. In those cases the supplier was under a contractual obligation to deliver the goods at Dharamtar port. e) the appellant has not passed on the bar of unjust enrichment and is required to pass the unjust enrichment as held by the Hon'ble Apex Court in the case of Sahakari Khand Udyog Mandal Ltd. 2005 (181) ELT 328 (SC) and f) that the certificate issued by the Chartered Accountant as well as Cost Accountant is not conclusive. 2.6. The Commissioner (Appeals) considering the grounds raised before him and set aside the refund claims of duty and interest sanctioned to the appellant. Aggrieved from the said order, the appellant is before us. 3. The ld. counsel appearing on behalf of the appellant submits that the refund claims have been filed by the appellant in terms of the direction of the Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause notice. In this case, show-cause notice is limited to the issue of bar of unjust enrichment. Therefore, it is not open to the revenue to travel beyond the scope of unjust enrichment. 8. It is further submitted that with regard to the question of unjust enrichment, the Adjudicating Authority has arrived at the decision that the incidence of duty has not been passed on as the appellants are operating losses in the light of the decision of the Living Media Industries Ltd. (supra), the bar of unjust enrichment is not applicable. Therefore, the impugned order is required to be set aside on this sole ground. 9. He further submits that it is observed by the Commissioner (Appeals) that no appeal having been filed against the order of finalisation of the provisional assessment during the period 1998 to 2004-05, the appellant had requested for evidence to be produced regarding finalisation of the provisional assessment which has not been produced. He further submits that the certain letters addressed with respect to the assessment being taken up for finalisation, cannot be treated that the assessments have been finalised. It is further submitted that the duty has been paid under prote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rect. It is further submitted that after 1998, the method of contracting changed and same has not been clarified by the appellant. Therefore, on this ground, the rejection of refund claim is justified. It is further submitted that bar of unjust enrichment is applicable to the facts of this cse in the light of the decision of Hon'ble High Court of Bombay in Bussa Overseas 2003 (158) ELT 135 which was upheld by the Hon'ble Apex Court vide order dated 28.11.2003. It is further submitted that unjust enrichment applicable in case of captive consumption as held by Solar Pesticides 2000 (116) ELT 401 (SC). He further submitted that the decision of Living Media Industries Ltd. (supra) is not applicable to this case. In fact, in that case the cost of raw material for bringing out the news magazines exceeds its retail price. Therefore, the impugned order is required to be upheld. 13. Heard both sides. Considered the submissions. 14. After considering the facts of the case, we find that the appellant has filed the refund claim in pursuant to the direction of the Hon'ble Apex Court in the order dated 29.09.2006. 14.1. For entertaining the refund claim, a show-cause notice was is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, therefore, it cannot be said that the review is beyond show-cause notice. If the contention of the ld. AR is accepted, then no periodical show-cause notice is required. In fact, the show-cause noticed is the foundation of the issue. It is admitted that the show-cause notice has not raised the issues which was raised in the review. 18. It is well determined principle that nobody can go beyond the scope of the dispute in proceedings before the Adjudicating Authority as held by the Tribunal in Carrier Aircon Ltd. (supra) wherein this Tribunal has observed as under:- "3. We have carefully considered the rival submissions and perused the records. The show cause notice alleges that chillers are nothing but parts of airconditioners and become complete airconditioner when fitted with air handling unit and description and functions of chillers are not covered under Chapter Heading 84.18 claimed by the assessees but fall under exclusion clause, and thus are not refrigerators or freezers or refrigerating/freezing equipment. The notice proposes classification of the goods in dispute under Heading 84.19 which covers machinery and plant designed to submit materials (solids/liquids, gasous) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... changer to gain heat so that it can be recycled.) This duel functioning of the chiller package unit is used as a probable rationale by the manufacturers to clear these goods at a lower excise duty under heading 8418.10. However, the heating application is generally a subsidiary function of the chilling machine and its primary or basic function is airconditioning only whether for comfort purposes or for process applications, as described in note 7 of chapter 84 clearly specified that "A machine which is used for more than one purpose is for the purposes of classification, to be treated as if its principal purpose were its sole purpose."Therefore the chiller package unit has to be categorised under air-conditioning machines of Tariff heading 84.15 and not 84.18". A comparison of the grounds raised in the notice with the grounds of appeal in the review order would show that they are different from each other and that the review order is entirely based upon the report of the Central Economic Intelligence Bureau. We, therefore, agree with the appellants that the review order seeks to make out a new case against them. This is not legally permissible under Section 35E(2), the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is settled law that no new point can be taken in review as the review under Section 35E of the Central Excise Act has to be confirmed to the points arising out of the order under (Review). This view was held by the Appellate Tribunal in the case of Extrusion Processes Ltd. v. C.C.E. Bombay - 1994 (69) E.L.T. 144. Both the lower authorities have dealt with the manufacturing process of the impugned product which is obtained after subjecting the Vetiverol oil to distillation and it remians as a residue in the pot; that it is undistillable waste. We also observe from the order of the Assistant Collector that the Chemical Examiner had not carried out any chemical analysis of the impugned product and had given his report after visual observation and smelling. The Revenue has neither controverted the findings of the Assistant Collector nor adduced any further test report after the product has been examined chemically in support of their contention." 20. Therefore, we hold that the revenue authority is not entitled to raise new issues on appellate stage. Therefore, the impugned order is limited to the issue of unjust enrichment. 21. As discussed above, as the selling price was less th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng himself as to the legality or propriety of any such decision or order and can direct to apply to Commissioner (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Commissioner. 27. In the present case, the refund claim has been filed under Section 27 of the Customs Act, 1962. The said 27 reads as under: "SECTION 27. Claim for refund of duty. - (1) Any person claiming refund of any duty and interest, if any, paid on such duty - (i) paid by him in pursuance of an order of assessment; or (ii) borne by him, may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Customs - (a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, before the expiry of one year; (b) in any other case, before the expiry of six months, From the date of payment of duty and interest, if any paid on such duty, in such form and manner as may be specified in the regulations made in this behalf and the application shall be accompanied by such documentary or other evidence (includi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such duty to any other person; (d) the export duty as specified in section 26; (e) drawback of duty payable under sections 74 and 75; (f) the duty and interest, if any, paid on such duty borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify : Provided further that no notification under clause (f) proviso shall be issued unless in the opinion of the Central Government the incidence of duty and interest, if any, paid on such duty has not been passed on by the persons concerned to any other person. (3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any Court or in any other provision of this Act or the regulations made thereunder or any other law for the time being in force, no refund shall be made except as provided in sub-section (2). 28. A reading of Section 27 would indicate that any person claiming refund of duty is required to make an application within time limit prescribed under the Act. The application has to be accompanied by various documents/evidences. Thereafter the Asst. Commissioner is required to examine the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in case he is of the view that certain points arising out of any of Asstt. Commissioner's decision requires determination, the Commissioner can direct him to apply for determination of such points to Commissioner (Appeals). It is not unusual that in certain cases of refund claim no show-cause notice is issued and the refund claim is sanctioned by the Asst. Commissioner as claimed by the applicant and thereafter the Commissioner in exercise of the power under Section 129D(2) examines the proceedings and direct the Asstt. Commissioner to apply for determination of certain points before the Commissioner (Appeals). 29. It may be added here that the position in respect of recovery of duties not levied or short levied or erroneously refunded under Section 28 of the Customs Act, 1962 is different. Under Section 28 of the Customs Act, 1962, the cause of action starts from the proper officer serving notice on the person chargeable with duty or interest and after serving the said notice and getting the reply from the concerned parties, and grant of personal hearing, proper officer decides whether there is short recovery or not. Thus in the case of recovery of duties, proceedings sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be discussing the points raised by the Commissioner of Customs and decided by Commissioner of Customs (Appeals) after discussing the bar of unjust enrichment. 32. As far as bar of unjust enrichment is concerned, at the outset, I observe that impugned order relies upon the Hon'ble Supreme Court judgement in the case of UOI vs. Solar Pesticides 2006 (116) ELT 401 (SC). This judgment was also emphatically mentioned by ld. AR, in addition to other judgments. I also observe that Hon'ble Supreme Court judgement in the case of Solar Pesticides takes into account the judgement in the case of M/s. Hindustan Copper Ltd. Case of Solar Pesticides is relating to captive consumption in Customs & Central Excise matters as is the case before us, while the case of M/s. Hindustan Copper Ltd. (supra) is relating to state excise. In view of above reasons, judgment in the case of Solar Pesticides has to be given precedence over the case of M/s. Hindustan Copper Ltd. 33. My ld. Brother has taken the view that the appellant has submitted that as the selling price was market driven, therefore, the same was not in their control and in the case of Hindustan Copper Ltd. (supra) the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble High Court. In the present case, appellant's contention is that duty element in dispute is negligible in the overall cost of production and there was no challenge about competency of centre to levy the same. 35. The Hon'ble Apex Court in the case of UOI vs. Solar Pesticides Pvt. Ltd. 2000 (116) ELT 401 (SC) has examined exactly the same issue that is relating to passing of burden of duty in the case of captive consumption of goods and has observed as under:- "20. We are of the opinion that the aforesaid observations would be applicable in the case of captive consumption as well. To claim refund of duty it is immaterial whether the goods imported are used by the importer himself and the duty thereon passed on to the purchaser of the finished product or that the imported goods are sold as such with the incidence of tax being passed on to the buyer. In either case the principle of unjust enrichment will apply and the person responsible for paying the import duty would not be entitled to get the refund because of the plain language of Section 27 of the Act. Having passed on the burden of tax to another person, directly or indirectly, it would clearly be a case of u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the said case the appellant was a publisher of newspaper and for the said purpose, was importing the newsprint and it was found that the cost of newsprint alone far exceeds the price at which the newspaper were being sold, and there was a change in the duty rate for some intervening period (duty earlier to this period as also after the period was same) and it is in those circumstances, that the Hon'ble Apex Court has taken the view that the bar of unjust enrichment would not be applicable in the facts and circumstances of the case. The facts in the present case are very different. Here the price at which the final products were being sold were market driven and not fixed as in case of newspaper there was no change in the rate of duty for a short period as was the case in the case of Living Media Industries Ltd. (supra). Appellant themselves have claimed that the duty involved due to barging charges is negligible. In view of this position, the facts of the present case are entirely different and the conclusions drawn in the case of Living Media Industries Ltd. cannot be applied to the present case. 38. It is observed in the present case that the appellant themselves have cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. I also note that the revenue is not questioning the refund claim for the period up to 1997-98 except on the issue of unjust enrichment. Undoubtedly, the issue discussed and the conclusions drawn by the Hon'ble Supreme Court would have to be kept in mind for examining the refund claim for the subsequent period also viz. 1998-99 to 2004-05. 41. The revenue has contended that after 1998 in many cases the goods were purchased by the appellant on the basis of high sea sales and contract in such cases were for Mumbai floating light. Mumbai Inner/outer anchorage from where the appellants were required to make own arrangement for transport of the goods through barges to Dharamtar port. In these contract the ratio of the Hon'ble Supreme Court's judgment will not be applicable. We note that neither revenue nor appellant have given the details of the bills of entry for which the above claim is true. Details of such contract or copy of contracts have not been produced. It is also noted that the Commissioner (Appeals) has upheld the above argument but has not quantified the amount. During the hearing, we asked the appellant the details of such cases or copies of the contract pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t they were paying the duty under protest as the issue is being disputed by the appellant in the higher appellate forum including Hon'ble Supreme Court. Under the circumstances, in my view, it cannot be said that the appellants have not challenged the assessment order and therefore, ratio of the judgment of the Hon'ble Supreme Court in the case of Priya Blue will not be applicable as the issue was very much challenged by the appellant and was before the Hon'ble Supreme Court. In my view, since the protest letters were admittedly sent to the revenue and were received, the time limit prescribed under Section 27 of the Customs Act, 1962 would not be applicable for claiming of refund as far as duty leviable on barging charges alone is concerned. 44. Another issue wherein the original authority and appellate authority have taken different view is relating to applicability of unjust enrichment before 13.07.2006. Original authority has taken a view that clause of unjust enrichment was inserted in Section 18 of the Customs Act, 1962 w.e.f. 13.07.2006 and is applicable prospectively and will not cover the cases prior to 13.07.2006. Original authority has taken support from Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limiting factor under Section 129D(2) as held by Member (Technical). 2) In the facts and circumstances of the case, whether the bar of unjust enrichment will not be applicable as held by Member (Judicial) or bar of unjust enrichment will be applicable as held by Member (Technical) particularly keeping in view the fact that appellant himself has stated that duty under dispute is insignificant and negligible in the cost of production and amount is not being considered as Receivable by the appellant. 3) In respect of issues listed in para 39 to 45 whether Member (Technical) is correct. (Pronounced in Court on 01.09.2014) M/1009/15/CB Opinion of the 3 rd Member on the points of difference Per P.R. Chandrasekharan The first point of difference referred to me for consideration reads as follows:- Whether in the facts and circumstances of the case, whether reviewing authority cannot go beyond the show-cause notice as held by Member (Judicial); or In case of refund claim, the proceedings start from the time refund claim is filed and since there is no requirement of issuing show-cause notice under Section 27 of the Customs Act, 1962, and therefore, reviewing authority can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its circular No. 21/90-CX8 dated 4-4-90 and 19/93-CX6 dated 29-12-93 has clarified that show cause notice has to be issued by the department if it intends rejecting refund claims found to be incomplete or not supported by required documents or on the ground of unjust enrichment. In the present case, it is not in dispute that the only ground urged in the show cause notice issued was unjust enrichment. If that be so, Revenue cannot take recourse to Section 35E/129 (D) and urge additional grounds for rejection of refund claim or recovery of erroneous refund. Thus, the reference is answered in favour of the appellant and against the Revenue. 2. The second point of difference referred reads as follows:- In the facts and circumstances of the case, whether the bar of unjust enrichment will not be applicable as held by Member (Judicial) or Bar of unjust enrichment will be applicable as held by Member (Technical) particularly keeping in view the fact that appellant himself has stated that duty under dispute is insignificant and negligible in the cost of production and amount is not being considered as Receivable by the appellant." 2.1 The Hon'ble Member (Judicial) has held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se observations must be read in the context in which they appear to have been stated ..... Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes". The Supreme Court further observed that "circumstantial flexibility, one additional or different fact may make a word of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper". Therefore, I am of the considered view that the facts of the case before me are different and distinguishable from those obtaining in the Living Media case and hence, the ratio of the said decision shall not apply. 2.2 A nine judge bench of the hon'ble Apex Court in the Mafatlal Industries Ltd. case [1997 (89) ELT 247 (SC)] laid down the dictum that every refund of duty under the Customs Act or the Central Excise Act would be governed by the provisions of unjust enrichment in the following words:- "96. It would be evident from the above discussion that the claims for refund under the said two enactments constitute an independent regimen. Every decision favourable to an assessee/manufacturer, whether on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... throughout the period from 1998-99 to 2005-06 and therefore, the appellant has not passed on the incidence of duty on barge and stevedoring charges to any other person. He has placed heavy reliance on the decision of the Hon'ble Apex Court in the case of State of Rajasthan vs. Hindustan Copper Ltd. [MANU/SC/1640/1998]. In the said case, it was held that when the goods are sold in the domestic market at prices fixed by the M/s Metals and Minerals Trading Corporation on the basis of the prevailing price fixed by the London Metal Exchange both for the period in question (when the refund arose) and also for the prior and subsequent period and only such price could be charged and no part of the duty in respect of the raw material captively consumed in the manufacture of final product could be added, the principle of unjust enrichment would not apply. The contention is that when prices are governed by market conditions and the goods are sold at a loss, there would be a presumption in favour of the assessee that the incidence of tax has not bee passed on to the buyers. I have carefully considered this contention. As far as the decision in the Hindustan Copper case is concerned, the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the certificate dated 25-5-2009 given by the Cost Accountant M/s Dinesh Jain & Co. The said certificate merely states that based on the audited financial statements of Ispat Industries for the respective years contained in the attached statement and further based on the information and explanations furnished to us by the Company, we wish to confirm that the incidence of customs duty has not been passed on by Ispat Industries Ltd. to any other person. In the attached statement the particulars furnished for the various years are - a) operating income from sale of steel products; b) operating expenditure; c) operating profit/loss; and d) other income. There is no analysis whatsoever about the cost of production of the steel products sold, the factors that constituted the cost of production, whether the duty incidence on the raw materials was considered while taking the cost of production and other relevant factors. In the absence of any such analysis, the said certificate has no evidentiary value whatsoever and at best, it can be taken as merely inferential. The issue whether duty incidence has been passed on or not is a question of fact and such fact has to be established based on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eous refund. However, as regards the question of unjust enrichment, I agree with the Hon'ble Member (Technical) that the appellant has not discharged the onus cast on them to rebut the statutory presumption of unjust enrichment. With these observations, I return the reference to the regular bench for further necessary action. (Pronounced in the Court on 20/1/2015) 1. I have gone through the opinion of the Third Member. From the recording, it appears that the first point has been understood differently. The issue referred is not relating to issuance of show cause notice under Section 28 of the Customs Act but under Section 27 of the Customs Act. In this case, it is not the appellant's contention that show cause notice for erroneous refund under Section 28 was not issued to them or the said notice did not include the points mentioned in the review order issued under Section 129D(2) of the Customs Act or the said show cause notice was not issued within the time limit prescribed under Section 28. The issue was while processing the claim under Section 27, the Deputy/ Assistant Commissioner in order to observe principles of natural justice, issued a show cause notice dated 12.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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