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TMI Blog2005 (12) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... rein to forthwith pay to the petitioner company the amount of Rs. 41,48,176/-along with interest for the period of three months after 2nd January 2001 till the actual payment of the above amount at the rates that may be deemed fit by this Hon'ble Court; [C] Pending hearing and final disposal of the present petition, Your Lordships may be pleased to direct the respondent Nos. 3 and 4 herein to forthwith pay the amount of Rs. 41,48,176/ - to the petitioner company; [D] Pending hearing and final disposal of the present petition, Your Lordships may be pleased to direct the respondent Nos. 3 and 4 herein to forthwith pay interest at the rates specified under Section 27A of the Customs Act, 1962 during the aforesaid period; [E] An ex-parte ad-interim relief in terms of Paras 9 (C) and (D) above may kindly be granted; [F] That Your Lordships may be pleased to pass appropriate Orders thereby, dispensing with filing of certified copy of OIA No. 9/2004/9 (KDL)/Commr. (A)/Raj dated 9.1.2004 (Annexure "H"); [G] Any other further relief as may be deemed fit in the facts and circumstances of the case may also please be granted." 2. The petitioner is a Limited Company, engage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of Rs. 17,50,000/-, the finding was that "The question of sanctioning refund of that amount does not arise" because the amount "deposited in the High Court of Gujarat, Ahmedabad is not credited under the Customs Head." In respect of the balance claim of Rs. 23,98,178/-, the Deputy Commissioner held that, even if the said amount is sanctionable as refund due to the petitioner, the same is liable to be credited to Consumer Welfare Fund by invoking the principle of unjust enrichment as the petitioner had failed to establish that incidence of duty had not been passed to any other person. 6. The petitioner carried the matter in appeal. Vide Order dated 9.1.2004, the Commissioner (Appeals) held that (a) refund of Rs. 17,50,000/- is to be allowed subject to verification of records of Customs or the records of Gujarat High Court Registry to the effect that the said amount had been transferred under the Head of Customs duty; (b) the rejection of refund claim of Rs. 23,98,176/- was confirmed. 7. Mr. Paresh Dave, the learned advocate appearing on behalf of the petitioner, assailed the aforesaid order of Commissioner (Appeals) in relation to both the findings. Insofar as the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to interest on the refund that may be held to be available to the petitioner. 10. Ms. Avni S. Mehta, the learned counsel appearing on behalf of the respondents relied on the orders of the Deputy Commissioner and the Commissioner (Appeals). She also submitted that necessary directions, in relation to the amount of Rs. 17,50,000/-, may be issued to the authorities for verification as to whether the amount had been credited under the Head of Customs duty or not, because she had no instructions on this count. 11. Insofar as the first amount is concerned, namely, Rs. 17,50,000/-, the case of the Department is limited to the aspect as to whether the same has been credited under the Head Customs duty or not. after the amount was received from the Registry of the High Court. Though in the order in original, at one stage, the adjudicating authority sought to place reliance on the entries made by the petitioner by showing the sum as outstanding deposit in its balance sheets for different years, in light of the finding and direction of Commissioner (Appeals) and the facts which have come on record, it is no longer in dispute that the said amount was never paid as duty by the petitioner. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid over to the respondents herein and this payment was made by the Registry in pursuance of the Order dated 10.8.1993 passed by this Hon'ble Court in the Civil Application filed by the Union of India." 14. In the aforesaid circumstances, the respondent Department cannot insist and expect the petitioner to show and establish that the amount received by the Additional Standing Counsel of the Department vide cheque issued in favour of the Union of India on 18.12.1993 has been credited under the appropriate head. The record is with the Department. It is for the Department to verify as to under which head it has credited the amount. The petitioner does not have access to the said record and cannot be expected to establish the entries made therein. 15. Even if, for the sake of argument, it could be presumed that the amount has not been credited in the proper head, the petitioner cannot be penalized for the same. The petitioner is not in charge of making the appropriate entries, nor is in control of the account heads of the respondent Department. Therefore, the insistence that unless and until the petitioner establishes that the amount has been credited under the Head of "Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a direction to dispose of the claim within one month with further direction to the assessee concerned to have the bank guarantee extended till final disposal of the claim of refund. Against the aforesaid direction, the assessee approached the Apex Court and succeeded vide Order dated 26.11.1993. The Excise Department sought review of the same and in review proceedings, the Apex Court took note of the fact that the encashment of bank guarantee on 17th November, 1993 was not warranted in any manner whatsoever in absence of any valid order in favour of the Department and hence, the Apex Court directed the excise authorities to repay the amount so collected by encashment of bank guarantee. The Apex Court also noted that the direction issued by the High Court to extend the bank guarantee could not have been issued by the High Court as the only prayer before the High Court was seeking release of the bank guarantee already furnished. It is in aforesaid backdrop of facts and circumstances that the Apex Court posed the question and answered the same: namely whether furnishing of a bank guarantee for all or part of the disputed excise duty payment pursuant to an order of the court is equiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acter of duty paid and thereafter, even when an assessee succeeds ultimately, the claim of refund will be for refund of duty paid. The claimant has to comply with the conditions of the provisions pertaining to refund, namely, Section 11B of the Central Excise Act, 1944 and Section 27 of the Customs Act, 1962. 21. Alternative claim that in case of capital goods, there could be no requirement of establishing that the incidence of duty has been passed on also proceeds on an erroneous premise. In the first instance, the contention that the user of capital goods for the manufacture of final products cannot be equated with user of inputs is true only to a certain extent. However, when the issue is in relation to whether the duty paid on such capital goods and the duty paid on inputs is required to be refunded, the requirement of the provision, namely, that the incidence of such duty has not been passed on, cannot be read so as to mean it is applicable only to inputs and not to capital goods. It is not in dispute that such capital goods, namely, the plant and machinery are put to use for the purposes of manufacturing the final products. Hence, for the purposes of arriving at the cost of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... controversy in case of raw material, it cannot be contended therefrom that the principle laid down therein would not be applicable in case of capital goods or plant and machinery. The Apex Court has explained the use of the words "incidence of such duty" in Section 27 (1) of the Customs Act as under: "The use of the words "incidence of such duty...." is significant. The words "incidence of such duty" mean the burden of duty. Section 27 (1) of the Act talks of the incidence of duty being passed on and not the duty as such being passed on to another person. To put it differently, the expression "incidence of such duty" in relation to its being passed on to another person would take it within its ambit not only the passing of the duty directly to another person but also cases where it is passed on indirectly." (emphasis supplied). 24. Therefore, all cases where the "incidence of duty" has been passed on indirectly have to be considered within the parameters of Section 27 (1) of the Customs Act. 25. During the course of hearing, it was submitted on behalf of the petitioner that even if such an incidence of duty might form part of the cost price, unless and until it goes in as a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereinbefore. Suffice it to state that the cost of the said crucibles would always be taken into consideration while arriving at the cost of manufactured product, and as a consequence, the sale price. 27. There is one more aspect of the matter. It was submitted that due to various reasons, sale price may be fixed so that sale price might be less than the cost price, resulting in loss. The contention that merely because the sale price might be such that, due to market factors, an assessee may incur losses would not necessarily reflect that the incidence of duty has not been passed on. May be, in a given case, only a proportionate part may be passed on in such circumstance. Ultimately, it would be a question of fact and evidence will have to be led in this context. In the case of the petitioner, both the adjudicating authority and the appellate authority have come to the conclusion that the petitioner has not been able to establish that incidence of duty had not been passed on. This is a finding of fact and it is not possible for this Court in these proceedings to take a different view of the matter. 28. In principle, the contention that in case of capital goods, the incidence of du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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