TaxTMI 
TaxTMI 
2019 (9) TMI 716
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.... CTH 85171290 (herein after referred to as the "impugned goods"). They had been paying CVD at the rate of 6% till 28.02.2015 and 12.5% after 01.03.2015 on imported impugned goods. The Countervailing Duty (CVD) was equivalent to Central Excise duty leviable on the domestically produced impugned goods. A Notification No. 12/2012 -CE dated 17.03.2012 (as amended) provided central excise duty rate of 1% if no Cenvat Credit was taken in respect of inputs or capital goods used in the manufacture of impugned goods. The reduced rate of duty was not being extended to the importers by the department for the purpose of payment of CVD on the ground that the exemption under aforesaid notification No. 12/2012 CE dated 17.3.2012 was not available for imports as provisions of Cenvat Credit were not applicable to the imported goods as the Cenvat Credit was not admissible to them. The Hon'ble Apex court vide its judgement dated 26.03.2015 in the matter of M/s SRF Ltd. vs Commissioner of Customs, Chennai reported in 2015 (318) ELT 607 (SC) has held while interpreting a similar notification No. 06/2002-CE dated 01.03.2002 that the reduced rate of excise duty will be applicable to CVD even in respect o....
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....the issue of unjust enrichment was not decided with the observation that since the claims were not admissible on merits and limitation there was no need to go into the aspect of unjust enrichment. The appellants filed an appeal against original adjudication order dated 26.02.2016 with the Commissioner (Appeals). During the hearing before the Commissioner (Appeals), the Superintendent Shri S S Yadav appeared for the department and pleaded that the appellants may be asked to produce the financial accounts, invoices in respect of sale and purchase of mobile phones to examine as to how the incidence of duty has not been passed on to the buyers. On the basis of examination of the documents produced by the appellants, the Deputy Commissioner, Air Cargo Complex, Jaipur vide his report dated 19.02.2018 submitted that it appeared that the duty incidence had not been passed on to the buyers. In his another report dated 23.03.2018, the same Deputy Commissioner reported that they are not in a position to ascertain whether customs CVD was included in their sales invoices or not. The appellants were granted personal hearing on 11.04.2018 by the Commissioner (Appeals) who apart from arguing the c....
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....laim that the duty was not passed on to the buyers inasmuch as a certificate (for individual refund claims)issued by Chartered Accountant who was their statutory auditor, were filed indicating that the incidence of duty had not been passed on to the buyers. He further argued that the amounts of refunds claimed were shown as receivables/ recoverable in balance sheets and financial books of accounts of the appellants and that the sale prices were not linked to the rate of CVD which were evidenced by the fact that the sale prices of the impugned goods either remained at the same level when rate of CVD was enhanced from 6% to 12.5% with effect from 01.03.2015 or same has come down. He produced a compilation of various case laws to emphasize that the evidence produced were sufficient to hold that the incidence of duty was not passed on to the buyers. 5. The learned advocate has further argued that a refund of Rs. 28,48,587/- has already been sanctioned to them by the Deputy Commissioner (in the case of M/s. Trust Marketing) in a similar case and on the same issue and the present case is pari materia to the refund sanctioned by the Deputy Commissioner vide his Order no. 322/2016 issue....
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....advocate has taken us through the evidence as required to prove that the bar of unjust enrichment on above mentioned criterion has been clarified by the appellant. The learned advocate has taken us through the Chartered Accountant's certificate issued by M/s. Kotwani & Co. dated 28.9.2015 wherein it is categorically mentioned that "as a business practice any variation / increase in tax burden has been taken as a hit against the profit margin of the company and the same is evident from the cost sheet examined. Accordingly, we certify that the claimant has not passed on the incidence of duty to the buyers or any other person and hence the requirement to rule out unjust enrichment to the importer / claimant is fulfilled in respect of all goods imported and sold." 9. It has further been pleaded that the Chartered Accountants' certificate certified that the price at which the imported goods sold by the appellants to the buyers was not increased on increase in the rate of CVD. The learned advocate has pointed out that in the case of Intex Technologies (India) Ltd. vs. Union of India (Writ Petition (C) No. 10618 of 2016) has held that the refund claim is to be accepted and passed if th....
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....ger account of the financial year 2015-2016 provides the bifurcations of the disputed amount as follows: a) CVD refundable for year 2014-2015: Rs. 24,69,98,215/- b) CVD Refundable for year 2015-16 : Rs. 23,62,85,014/- Total CVD refundable : Rs. 48,32,83,229/- 12. In view of the above, the learned advocate has tried to establish that as the books of accounts of the appellant clearly show that since the amount has been shown as recoverable in the balance sheet, it proves that CVD has not been passed on to the customers during the period 2014-2016. The learned advocate has taken the support from following judicial pronouncements to establish that if the refund amount is shown as recoverable in the balance sheet, the doctrine of unjust enrichment is not applicable. a. Bajaj Auto Ltd. vs. CC [2017 (347) ELT 519(T)]; b. CC vs S Mathivathani Traders [2016(344)ELT 329 (T)]; c. Cargill Foods India Ltd. vs CCE [2010(262)ELT 691 Tri-Mum)]; d. CCE vs Shrinathji DYG [2010 (262 ) ELT 622 (Tri-Ahmd)]; e. Global Ventures vs. CCE, [2010 (261) ELT 1164 (Tri-Chen)] f. CCE vs Paradeep Phosphates Ltd.[2009(238) ELT 690 ....
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.... been passed on to the customers in the present case and the Commissioner (Appeals) has not considered the Chartered Accountant's certificate without giving any cogent reasons as why same is not being considered inspite of the fact that Chartered Accountant's certificate has been issued by reputed Chartered Accountant's firm after referring to the appellants financial books of accounts as well as sales invoices etc. 16. We have also heard learned Departmental Representative who has vehemently opposed the arguments putforth by the learned advocate on the ground that all these arguments have been examined at length by Commissioner (Appeals) before holding that refund claims are hit by unjust enrichment. He reiterated the findings of the Order in Appeal. 17. Having heard both the rival contentions and after perusal of record of appeal, we find that in the impugned order of Commissioner (Appeals), the refund claim of the appellant have been found acceptable on all other grounds except that the appellants have not been able to adduce evidences to establish that they have not passed on the burden of increase in CVD duty to the customers, and, therefore, the Commissioner (Appeals) h....
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....refund as recoverable in their balance sheet certainly proves that appellant have not passed on the burden of CVD duty to their customers. This Tribunal in its decision in Dabur India vs. Commissioner of Customs, Ghaziabad reported under 2008 (228) ELT 131 (Tri-Delhi) has held as follows: "5. We find that in this case admitted fact is that the appellants paid differential duty after clearance of goods. Demand of differential duty was confirmed for the period 1-3-90 to 30-9-97 and the duty has been paid in the year 1998. It is settled law that all the refund claimed are subject to the principle of unjust enrichment and onus is on the assessee to show that the burden of duty has not been passed on to the customer. In the present case demand was confirmed in respect of product-Gulabari after classifying the same under heading different from heading claimed by the appellant. Demand was subsequently set aside by the Tribunal. In the balance-sheet for the financial year, 1997-98 this amount is shown as excise duty recoverable from the revenue department. The amount, in question, was also shown in subsequent balance sheet as recoverable excise duty. We find that the Tribunal in v....
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.... as per 'Standard Accounting Principals, (which learned Commissioner (Appeals) did not have a look at) the 'contingent assets' are to be reflected in the financial year in which such assets actual arise. 23. The relevant extract of the Financial "Accounting Standard (AS) 29" for 'provisions, contingent liabilities and contingent assets' is reproduced here below :- Contingent Assets :- "30. An enterprise should not recognize a contingent asset. 31. Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits to the enterprise. An example is a claim that an enterprise is pursuing through legal processes, where the outcome is uncertain. 32. Contingent assets are not recognized in financial statements since this may result in the recognition of income that may never be realized. However, when the realization of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate. 33. A contingent asset is not disclosed in the financial statements. It is usually disclosed in the report of the approving authority (Boa....
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.... evident from the cost sheets examined. Accordingly, we certify that the claimant has not passed on the incidence of the differential customs duty to the buyer or any other person and hence the requirement to rule out unjust enrichment to the importer/ claimant is fulfilled in respect of all goods imported and sold as covered by the subject claim. E. The Company has filed only single claim against all bills of entries referred in Annexure A." 26. A perusal of the above mentioned Chartered Accountant certificates dated 28.9.2015 makes it very clear and leaves no doubt in the mind of anyone that certificate has been issued after verifying the appellant importers financial books of accounts as well as other relevant documents and records. Indeed it specifically mentions that the appellant have not increased the price of their product after increase of rate of CVD duty. It is specifically mentioned that there is no unjust enrichment on account of change in the rate of duty of the CVD in the present case and the burden of increased rate of CVD has not been passed on to the Customers as price of the impugned goods have remained same. We feel that a Chartered Accountant is a q....
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....e was no reason whatsoever for respondent No. 4 not to accept the very same documents in respect of the imports between 27th March, 2015 and 31st March, 2015. The certificate of the CA is categorical that the incidence of CVD, even in respect of these imports, had not been passed on to the customers. Consequently, there was no valid justification for respondent No. 4 to have denied the refund claim." 28. It is also a matter of record that the Deputy Commissioner of Customs, Air Cargo Complex, Jaipur was also asked to examine and verify the record of the appellant to determine whether the appellants have passed on the burden of CVD duty to the Customers or not and give a report in this regard. The Deputy Commissioner vide his report issued from F. No. 1/Cus/JD/54/IV/16/393/506 dated 19.02.2018 has submitted the report to the Commissioner (Appeals) after verification of documents/ records such as, purchase invoices, import documents, as well as sales invoices, etc. and has reported that they are satisfied with the records submitted by the appellant and reported as follows: (a) That the price at which the imported goods were sold to the buyers has not been increased due to....
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....rden of enhanced duty has not been passed down to the buyers. 32. Coming to the aspect whether the sales invoices of the product concerned for the relevant period showed that there was no change in the price of the goods. In this regard, we find that it has been claimed by the appellant that prices of various models of mobile phones imported by them have either remained the same or have gone down during the relevant period for which the refund claim have been filed. The assertion of the appellant has also been endorsed by the Chartered Accountant certificate as well as the report dated 19.2.2018 submitted by the Deputy Commissioner of Customs. 33. The record of the appeal have a table of sale prices of various models of mobile phones which gives comparative price for the period when the rate of duty was 7% when it was increased to 13.5% and as to how the prices have behaved during the relevant period. In case of appellant - M/s Trust Marketing. 34. A glance at these tables and scrutiny of same provides that the prices for various models of mobile phone indicate that inspite of the fact that the rate of CVD have gone up, the retail sales price both for dealers as w....
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....dence of duty has not been passed to the customers, in that case, it can safely be presumed that since the duty burden has not been passed on to the customers and therefore, the question of unjust enrichment does not arise. The relevant extract of the above mentioned decision of the Hon'ble Supreme Court is reproduced hereinbelow: "3. Assessee thereafter filed an application claiming refund of the customs duty paid by it. The authority-in-original rejected the claim on the ground that the assessee had passed on the burden of the customs duty to its customers and refund of the customs duty would amount to unjust enrichment as provided under Sections 27, 28(C) and (D) of the Act. Assessee challenged the order-in-original before the Commissioner of Customs (Appeals). Commissioner of Customs (Appeals) upheld the order-in-original. Assessee thereafter filed appeal before the Tribunal. Initially, there was a difference of opinion between the Member (Technical) and Member (Judicial) regarding the refund of the customs duty. It was held by the Member (Technical) that the incident of duty has not been passed on to the customers and therefore the assessee is eligible to claim the re....
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....ome forward and admitted that they have realised a certain amount from some of the customers, no evidence has been produced by the department that the Appellants have realised over and above that admitted amount. Therefore the admission of the Appellants for realisation of a certain amount cannot be held against them for the entire amount, in the absence of any evidence to the contrary by the department. The inference we agree with the learned Consultant of the authorities below is based on surmises and conjecture. This is apparent from the use of the expression "could have been realised........." 5. In view of the foregoing discussion, we allow the Appeal with consequential relief to the Appellants and any refund due to them should be given forth with, matter being of very old - 1977 to 1982. Amount which has been realised by the Appellants from their customers should be deposited with the Consumer Welfare Fund as per the provision of law." 40. The decision of this Tribunal in the above mentioned case has been affirmed by Hon'ble Supreme Court reported under 2001 (127) ELT A 162 (SC). In another case in Birla Corporation Ltd. vs. CCE Lucknow reported under 2017 (358) E....
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....ficate that burden of tax is not being passed down to the customers, etc. 43. Since Hon'ble Supreme Court observations in case of Allied Photographics India Ltd. on the aspect of price, were for a specific situation and cannot generally be applied in every situation as has been distinguished in case of Hero Motocorp Ltd. versus Commissioner of Customs (Import and General) reported in 2014 (302) E.L.T. 501 (Delhi). The relevant extract of same is reproduced here below :- "14. The learned counsel for the respondent while referring to the decision of Allied Photographics India Ltd. (supra), has submitted that same or uniformity of price before and after the assessment does not show that the incidence of duty was not passed on to the buyer as uniformity may be due to the various factors. We would like to reproduce Paragraphs 17 and 18 of the decision in the case of Allied Photographics India Ltd. (supra), which read :- "17. On the above facts, the short point which arises for determination is - whether incidence of duty was passed on by NIIL to its distributor M/s. AGIL and whether M/s. AGEL in turn passed on the burden to its dealers. On the first point, NIIL conc....
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....ase to the buyer is a relevant factor. None of the authorities below have looked into this aspect. Even the Appellate Tribunal has not gone into this relevant factor. It has merely quoted the passages from the order of the lower authority, whose order was impugned before it. Costing of the goods in the hands of the distributor, the cost element and the treatment given to purchases by the buyer in his own account were relevant circumstances which the authorities below failed to examine. It was submitted that cost of purchase was not a relevant factor. It was submitted on behalf of the respondent that the resale price charged by the buyer was not a relevant factor. It was submitted that since the sale price of the goods before and after the assessment remained the same, the burden of excess duty was absorbed by the respondent. It was submitted that in any event the sale price of the goods increased much less than the amount of duty (differential) involved in this case and, therefore, incidence of duty was not passed on to the consumers. In this connection, reliance was placed on several judgments of the Tribunal. We have gone through these judgments. They are not applicable to the fa....
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....ty burden has not been passed on. Therefore, the fact that there was no increase in price is a relevant factor but not an inevitable conclusive factor. Several other facets and material relevant should be given due consideration. 16. In the facts of the present case, it is not disputed or denied that there was no change in the price whatsoever and the refund of CVD was claimed within a short time and the amount involved is very small compared to the overall transactions or turnover of the appellant. The appellant had filed affidavits and the certificate of the Chartered Accountant certifying the factual position and asserting on oath with documents that duty burden was not passed. We do not agree with the counsel for the respondent that the certificate should be disbelieved. When a professional like a chartered accountant gives a certificate, he owes and takes responsibility of what he certifies as personally ascertained and known to him. Even when an individual or officer of a company certifies a particular fact, the same should be normally believed unless there are grounds and reasons to reject or disbelieve the said assertion. The assertion should be objectively examine....
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....s for pre and post-period and when there is no other negative factor or evidence to the contrary to disbelieve, the contention should be accepted. To deny what was paid and has to be refunded by law to the said person is not fair, just and equitable". 44. In view of above and considering the facts of the matter, we find that the element of unjust enrichment are not present in the matter at hand. 45. The provision of Section 28C and 28D of Customs Act are presumptive provisions and once the importer assesse submits his claim that he has submitted the required sales invoices etc. it is on the part of the Department to establish that assessee has not passed the burden of enhanced duty on the customers. In this case we find that all the invoices, purchase and sales invoices have been submitted to the Department and Deputy Commissioner in his report dated 19 February 2018 has reported that burden of enhanced duty has been borne by the appellant and there is no element of unjust enrichment. Thus we find that the appellant has fulfilled this responsibility as cast by Section 28C and 28D of Customs Act, 1962 and Department has failed to establish any element of unjust enrichment. The....
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....as set aside after accepting the contention that presumption in law of having passed the duty burden is a rebuttable presumption and since invoice and certificate was not being disputed. The refunds were ordered as order directing the same to be credited to Consumer Welfare Fund have not sustained. Following this decision and finding the facts to be similar this appeal is also to be allowed since nothing contrary to this decision of Tribunal has been shown. 46. We also take note of the fact that Assistant Commissioner of Customs (Refund), New Delhi vide his Order No. 322/2016 issued from F.No. VIII(E)20/Refund/ACE/156/2016 dated 18.04.2017 has sanctioned the refund of Rs. 28,48,587/- to the appellant namely, M/s. Trust Marketing on the basis of the facts, which are pari materia and the refund has also arisen after the judgement of Hon'ble Supreme Court in the case of M/s. SRF Limited. The learned Assistant Commissioner who has sanctioned the refund amount to the appellant has held that " I find that the application containing that burden cast upon them to prove that incidence of duty not passed on to the customers was successfully discharged by the fact that the amount of excess....
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.... July, 2015 produced by the importer do not reflect the CVD amount separately which, prima facie, indicate that the burden of SAD has not been passed on by the importer to their customers directly. Further, I have already taken note of the fact that the importer has submitted a Chartered Accountant's Certificate issued by M/s. Nayyar Maniar & Associates LLP, M. No. 502101, to the effect of certifying that the burden of CVD under this refund claim has not been passed on to the buyers and the refund being claimed is shown in their books of account/balance sheet for the year ended 31 March, 2016 as amount recoverable from the Customs. Accordingly, I hold that the provisions of unjust enrichment clause under Section 28D read with Section 27 of the Customs Act, 1962 are not applicable to the facts of this case and hence not invocable." 27. By the same yardstick, there was no reason whatsoever for respondent No. 4 not to accept the very same documents in respect of the imports between 27th March, 2015 and 31st March, 2015. The certificate of the CA is categorical that the incidence of CVD, even in respect of these imports, had not been passed on to the customers. Consequentl....
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....ecorded detailed finding on the issue after considering various decisions/orders of the Hon'ble High Court of Delhi and held as under: "24. It has been explained by learned counsel for the petitioner that no refund claim had yet been made in respect of the aforementioned B/Es during the financial year which ended on 31st March, 2015. Since the refund applications were submitted only during FY 2015-16, the outstanding refund in respect of these four B/Es could not have been shown in the balance sheet for FY 2014-15. Indeed, the mere fact that this amount was not shown as outstanding during the year 2014-15 would not mean that the petitioner is not entitled to claim refund. The petitioner cannot possibly be denied refund if it, in fact, did not pass on the burden of CVD to its customers. 25. What respondent No. 4 had to examine was whether the claim of the petitioner that it had not passed on the incidence of CVD in respect of the above B/Es for 27th March, 2015 to 31st March, 2015 to the customer was supported by proper documentation. 26. Here it is interesting to note that the petitioner submitted the same CA certificate and documents (including sales inv....
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....nouncement on the same issue, I find that the impugned order to that extent contested in these appeals are unsustainable and liable to be set aside and I do so". 49. In view of entire discussions, we hold that the appellants have been able to establish beyond doubt that burden of enhanced CVD has not been passed down to the buyers and therefore, the element of unjust enrichment is not present in this case, thus, the subject refunds are admissible to the appellants. Accordingly, we hold that the impugned order in appeal under challenge is devoid of any merit and deserves to be set aside, hence we set aside the same. The appeals are accordingly, allowed with consequential benefit, if any. (Pronounced in the open Court on 16/9/2019) ============= Document 1 Details of Cost Details of Sale Model No. L700 (Rajasthan Custom Import Import date duty rate Price Total Import duty Cost Selling Date of sale price retail segment price) 04-05-2015 8 21-01-2015 7% 1,302 102 1,404 20-05-2015 1,758 13-10-2015 12-10-2015 1,759 13.50% 184 1,302 1,486 17-10-2015 1,75 L700 (Rajasthan distributor ....
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....egment) Aug. 15 P2S(Distributor) Nov. 14 7% 6499 4387(4091+296) Nov.14 5033 P2S(Distributor) Nov.14 7% 6499 4387(4091+296) April & 4893 May 15 P2S(Distributor) July.15 13.5% 5499 3996(3513+483) Oct. & 3814 Nov.15 Document 3 Table - A. Details of Cost Details of Sale Custom Import duty Import Import Total Selling Model No. date rate Price duty Cost Date of sale price S96[Chattisgarh 24-04-2015 Distributor 2,429 Segment Price 19-01- 7% (Discount @ 30-04-2015 2015 2,027 159 2,186 2,429 6.5%)] 27-04-2015 2,429 06-05-2015 25-04- 2015 2,429 13.50% 2,075 285 2,360 23-05-2015 2,429 P2[Rajasthan 06-10-2014 Retail distribution 01-10- 4,515 7% segment(Discount 2014 3,748 268 4,017 06-10-2014 @6.5%)] 4,515 09-04-2015 08-04- 2015 4,129 13.50% 3,539 518 4,057 09-04-2015 4,129 P2[Rajasthan 06-10-2014 retail distributor 01-10- 4,580 7% price (Discount @ 2014 3,748 268 4,017 5%)] 30-09-2014 4,580 11-04-2015 08-04-....