Seller entitled to excess export duty refund under Notification 62/2007 as duty burden not passed to buyer

CESTAT Bangalore allowed the appeal for refund of excess export duty paid following Notification No.62/2007 dated 03.05.2007. The contract clause clearly stated seller would bear all Indian taxes on cargo. Bank realization certificate, invoice, and bill amount in foreign exchange supported that duty incidence was not passed to buyer. Commissioner (Appeals) incorrectly rejected the refund claim despite undisputed documentary evidence including buyer's undertaking confirming duty was not passed on. The tribunal found seller bore the duty incidence and documentary evidence conclusively discharged the unjust enrichment burden.

---

---

Issues Involved:
1. Eligibility for refund of export duty.
2. Burden of proof regarding unjust enrichment.

Summary:

1. Eligibility for Refund of Export Duty:
The appellant, M/s. Muneer Enterprises, claimed a refund of export duty paid in excess due to Notification No.62/2007 dated 03.05.2007, which reduced the duty rate. The original authority verified the contract dated 26.04.2007 and concluded that the appellant had not charged or received any amount over the contracted price, thus holding that the incidence of duty was not passed on to the buyer and sanctioned the refund.

2. Burden of Proof Regarding Unjust Enrichment:
The Commissioner (Appeals) did not dispute the facts but found them inconclusive for discharging the burden of unjust enrichment, relying on the Circular dated 28.05.2008, and rejected the refund claim. The appellant argued that the export duty was not recovered from the buyer, supported by the audited balance sheets, Chartered Accountant certificate, and other relevant documents. They cited several judgments to substantiate their claim that the burden of duty had not been passed on to the buyer.

Judgment:
The Tribunal noted that the primary question was whether the incidence of duty had been passed on to the buyer. It was observed that Clause 4 of the contract clearly stated that all Indian taxes on cargo would be borne by the seller. The Tribunal found that the Bank Realization Certificate, invoice, and other documents supported the appellant's claim that the duty was not passed on to the buyer. The Tribunal criticized the Commissioner (Appeals) for rejecting the refund claim without proper justification and relying on surmises and conjectures.

The Tribunal referred to various judgments, including CCE vs. EL.P.EM. Industries and Indian Metals and Ferro Alloys vs. CCE, emphasizing that invoices are the best evidence to determine whether the duty burden has been passed on. It was noted that if invoices do not show any element of duty recovered from customers, it should be assumed that no burden of duty has been passed on.

The Tribunal also referred to the Asia Pacific Commodities Ltd. vs. Assistant Commissioner of Customs case, which highlighted that under Incoterms 2000 for FOB shipments, the seller bears all expenses, including customs duties, before the goods are put on board.

In conclusion, the Tribunal found that the appellant had borne the incidence of duty and that the Commissioner (Appeals) had erred in rejecting the refund claim. The appeal was allowed with consequential relief as per law. The decisions cited by the Revenue were deemed not applicable to the facts of the present case.

---