2023 (4) TMI 787 - AT - Customs

Customs duty refund appeal denied due to lack of evidence on goods descriptions. Unjust enrichment resolved in company's favor.

Commissioner of Customs (Exports), Chennai Versus M/s. LG Electronics India Pvt. Ltd.

The Tribunal dismissed the Department's appeal in a customs duty refund case. The Department's challenge based on discrepancies in goods descriptions was ... Refund claim of SAD for the whole of the additional duty of customs paid at the time of import of electronic goods which were subsequently sold in the domestic market with proper sales invoice - Principles of Unjust Enrichment - HELD THAT:- M/s. LG Electronics India P. Ltd. has imported goods claiming exemption under Notification No.102/2007-Cus. dated 14.9.2007. As noted by the Commissioner (Appeals), Revenue has not produced any documentary evidence at any stage of the appeals to show that discrepancy exists between the description of goods imported and those sold. The Commissioner (Appeals) is agreed upon that Revenue has not provided evidence to establish the fact as alleged by them and their appeal in this regard fails. Unjust enrichment - HELD THAT:- The appeal has stated that the procedure to be adopted for refund of 4% additional duty of customs is given in Board Circular No. 6/2008-Customs (F. No. 401/104/2007-Cus.III) dated 28.4.2008 and Customs Public Notice No. 39/2011 dated 14.6.2011 - As per para 6.2 of the said Board‘s circular, Statutory Auditors / Chartered Accountants are required to explain how the burden of 4% CVD has not been passed on by the importer and to fulfill the requirements of unjust enrichment. It is found that the certificate of the Chartered Accountant submitted in this case does mention that the aforesaid claim of Rs.43,98,399 is out of Additional Duty of Customs and has been recorded in the books of accounts as ‘Claims Recoverable’ from Customs Department. There is nothing in the appeal to show that 100% verification of invoices was not done by the Chartered Accountant before submission of the claim. The Boards Circular only requires the statutory auditor/Chartered Accountant who certifies the importer’s annual financial accounts under the Companies Act or any statute, to explain how the burden of 4% CVD has not been passed on by the importer and to fulfill the requirement of unjust enrichment - as stated by the respondent, satisfied by the Chartered Accountant’s certificate - there are no grounds in the appeal strong enough to prima facie differ from the views of the respondent. Appeal filed by Revenue rejected. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether the refund claim of 4% additional duty (CVD) could be rejected on the ground that goods described in sales invoices differ from the Bill of Entry descriptions such that the refund was not for the goods actually imported. 2. Whether the Chartered Accountant's / statutory auditor's certificate submitted in support of the refund claim satisfied the requirement under Board Circular No.6/2008-Cus. (and relevant Customs Public Notice) that it explain how the burden of 4% CVD was not passed on (i.e., to address unjust enrichment). 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Discrepancy between descriptions in Bill of Entry and sales invoices Legal framework: Refund of 4% CVD under the exemption notification operates by way of refund post-importation subject to documentary proof; refunds must correspond to imported goods as shown in Bills of Entry. Precedent treatment: No judicial precedents were invoked or considered by the Court in the text; the Tribunal analysed the matter on the facts and documentary record before it. Interpretation and reasoning: The Tribunal examined whether Revenue produced documentary evidence (sample sales invoices and corresponding Bills of Entry) to substantiate its allegation of mismatch. The Tribunal accepted the Commissioner (Appeals)'s finding that Revenue failed to produce such specific documentary proof and only made general allegations about descriptive differences. The Tribunal noted that descriptions in Bills of Entry were general while invoice descriptions were more specific, and that the onus on Revenue to demonstrate discrepancy with documentary evidence was not discharged. Ratio vs. Obiter: Ratio - where Revenue alleges that a refund does not relate to imported goods because of descriptive discrepancies, it must produce documentary evidence (representative invoices and Bills of Entry) to establish the inconsistency; general or unparticularized assertions are insufficient. Conclusion: The Tribunal upheld the finding that Revenue failed to prove any material discrepancy; the allegation that the refund related to goods other than those imported was rejected. Issue 2 - Sufficiency of Chartered Accountant's / statutory auditor's certificate for unjust enrichment Legal framework: Board Circular No.6/2008-Cus. (para 6 and 6.2) requires that the doctrine of unjust enrichment be examined before sanctioning refund of 4% CVD; because of voluminous transactions, importers may produce a certificate from the statutory auditor/Chartered Accountant (who certifies the importer's annual financial accounts) explaining how the burden of 4% CVD was not passed on; importers must also make a self-declaration that the incidence was not passed on. Precedent treatment: No specific case law was cited or applied; the Tribunal applied the Board Circular's text to the facts. Interpretation and reasoning: The Tribunal construed para 6.2 as requiring an explanation by the statutory auditor/Chartered Accountant as to how the burden was not passed on, and not mandating a rigid form or specific formulaic words beyond such explanation. The Tribunal observed that the CA's certificate on record (produced at hearing) stated that the refund claim pertained to additional duty paid on goods imported and that the amount had been recorded in the books as 'Claims Recoverable' from Customs Department - an indication that the CVD burden had not been passed on and was retained by the importer in the accounts. The Tribunal further noted (i) the original authority had recorded satisfaction on unjust enrichment, (ii) Revenue's appeal materials were deficient (lacked representative invoices, Bills of Entry, the CA certificate, exemption notification and Circular/Public Notice relied upon), and (iii) Revenue's allegations were general and did not point to specific violations or paras of the Circular or Public Notice. The Tribunal found nothing to prima facie differ from the lower authority's view that the CA certificate satisfied the Circular's requirement. Ratio vs. Obiter: Ratio - a CA/statutory auditor's certificate explaining that the refund amount is out of CVD paid on imported goods and recorded in books as 'Claims Recoverable' can satisfy the Board Circular requirement that the auditor explain how the 4% CVD burden was not passed on; the Revenue must produce focused, documentary and specific contradictions to displace such satisfaction. Obiter - observations on procedural deficiencies of the Revenue's appeal book (absence of critical documents) and the need for a focused approach in alleging non-compliance. Conclusion: The Tribunal held that the CA certificate on record met the Circular's requirement to explain non-passing of burden and that Revenue did not demonstrate that 100% verification had not been done or point to any specific non-compliance; accordingly, the unjust enrichment objection failed. Cross-reference between issues The Tribunal's conclusions on both issues were interlinked: absence of documentary proof by Revenue to show mismatch between imported goods and sold goods (Issue 1) and absence of specific evidence to impugn the CA certificate or show non-compliance with the Circular (Issue 2) together led to rejection of Revenue's appeal. Final disposition and legal import Conclusion: The Tribunal rejected the Revenue's appeal and upheld the order sanctioning the refund. Legal import: administrative satisfaction based on a statutory auditor/CA certificate and absence of contrary documentary evidence from Revenue sufficed to meet the procedural unjust enrichment requirements under Board Circular No.6/2008-Cus. for grant of 4% CVD refunds; mere general allegations of discrepancy in descriptions without documentary proof are inadequate to deny refund.