Refund of special additional duty depends on accounting evidence and proof that the duty was not passed on to buyers.

Refund of special additional duty under Notification No. 102/2007-Cus. was supported where the importer initially booked the duty as part of purchase cost and later transferred it to a refund receivable account after departmental clarification. The timing of the accounting entry did not defeat the claim because the chartered accountant's certification and supporting records showed that the duty element had not been passed on to buyers. On those facts, the objection based on unjust enrichment failed and the refund was admissible.

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Issues: Whether refund of 4% special additional duty was admissible where the amount was initially treated as part of purchase cost in the year of import and was subsequently shown as receivable from the Government in the next financial year, and whether the claim was hit by unjust enrichment.

Analysis: The refund claim was made under Notification No. 102/2007-Cus. The rejection by the lower authorities rested on the absence of the refund amount as a receivable in the balance sheet for the year ending 31.03.2008. The accounting practice certified by the chartered accountant showed that the special additional duty was first debited to purchase account and, after clarification in the departmental circular, was transferred to a refund receivable account in the following year. The record also showed that the duty element had not been passed on to buyers. On these facts, the documentary evidence supported the claim and the objection based on the timing of accounting entries did not establish unjust enrichment.

Conclusion: The refund was admissible and the appellant was held eligible for refund of 4% special additional duty.

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