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Judgment
The appellant in the present case had imported 3000 MT of Aluminium Nitrate from Indonesia. At the time of filing home consumption clearance, appellant vide 3 bills of entry bearing No. 8236677, 8236679 & 8236680, all dated 18.01.2017, had claimed preferential rate of Basic Customs Duty (BCD) @ 5% under Notification No.46/2011 Entry No. 358(1) against BCD @ 7.5%. However, at that time, he could not produce original certificate of origin with authentic signatures. Accordingly, provisional assessment was resorted for. The bills were, therefore, assessed provisionally in terms of section 18(1) of the Customs Act, 1962, however, by extending the aforesaid notification benefit. The clearance was thus covered under the provisional duty bond with revenue deposit amount of Rs.15,09,146/- paid in lieu of the bank guarantee, pending verification of original certificate of origin.
1.1 On 09.01.2017 the appellant submitted the original certificate of origin along with original revenue deposit challans dated 23.01.2017 with the request for finalization of the provisional assessment. In the said letter of 09.06.2017, the appellant also requested for refund of aforesaid revenue deposit of Rs.15,09,146/-. The original authority vide order No.01/2008 dated 10.01.2018, after examining the applicability of principles of unjust enrichment and considering the certificate dated 20.09.2017 issued by the appellant's Chartered Accountant, sanctioned the aforesaid refund. However, vide review order No.08/2018 dated 05.04.2018 as passed under section 129D(2) of the Customs Act, 1962 that the Deputy Commissioner of Customs, Visakhapatnam was required to file an appeal against the said Order-in-Original. The said appeal of the department had been adjudicated vide the order under challenge bearing No.038/2018-2019 dated 27.09.2018 thereby setting aside the Order-in-Original. Being aggrieved, the importer had filed the present appeal before this Tribunal.
I have heard learned counsel for the appellant, Shri Nand Kishore Kothari and learned departmental representative, Shri Hanuma Prasad.
It is submitted on behalf of the appellant that the BCD as was applicable to the import of Aluminium Nitrate made by the appellant was @ 5% in terms of Notification No.46/2011 Entry No. 358(1). However, a provisional assessment was resorted to for want of certain documents and customs duty @ 7.5% was paid by the importer. At the time of final assessment, the benefit of notification was extended. Accordingly, the appellant became entitled for the refund of the duty paid to the extent of excess 2.5% thereof. The said amount is Rs.15,09,146/- as was paid as revenue deposit in lieu of bank guarantee. It is submitted that for these reasons the aforesaid amount has been shown as recoverable in the books of account of the appellant instead of being shown as expenditure.
3.1 It is submitted that principle of unjust enrichment has wrongly been invoked by the learned Commissioner (Appeals) while rejecting the refund of the appellant. It is further submitted that the certificate issued by the Chartered Accountant of the appellant has clearly explained that the duty incidence has not been passed on to end customers nor to any other person. The said certificate has wrongly been held to be insufficient. It is submitted that in view of the books of account of the appellant and the said certificate, no other document is required to be produced by the appellant. Apparently, appellant's case is not that of unjust enrichment, the claim, accordingly, has wrongly been rejected. Learned counsel has also impressed upon that the facts of the case of M/s Hindustan Petroleum Corporation Ltd vs Commissioner of Customs, Mumbai [2015 (328) ELT 410] are absolutely different from the facts of the present case. The same has wrongly been applied. The decision of Hon'ble Apex Court in the case of UOI vs Solar Pesticides Pvt Ltd [2000 (116) ELT 401 (SC)] has also been wrongly applied due to the different facts and circumstances than that of the present case. The order under challenge is accordingly prayed to be set aside and the appeal is prayed to be allowed.
While rebutting these submissions, it is submitted by the learned departmental representative that irrespective that the amount in question has been shown as recoverable in the books of account of the appellant, it was still the incumbent duty of the appellant/assessee to show the cost structure so as to prove that the duty incidence for the impugned amount has not been passed on by the appellant to its customers. It is submitted that according to section 27(1A) it was the mandate for the appellant to produce the documentary evidence as may establish that the amount of duty in relation to which the refund has been claimed was not collected by him from any other person. The Chartered Accountant's certificate, being non-explanatory about this aspect, has rightly been not considered by the Commissioner (Appeals). Impressing upon that there is no infirmity in the order under challenge, learned departmental representative prayed for dismissal of appeal.
After hearing rival contentions of the parties and perusing the entire record, it is observed and held as follows:
Commissioner (Appeals) has rejected the refund of the appellant based on the following two findings.
(i) that the appellant/assessee has not proved constructively with the supporting documents that the duty paid is not charged to the buyer and whether there was any change in the price of the goods produced by them to that effect.
(ii) CA certificate is not sufficient to show that burden has not been passed on to other persons.
To appreciate the correctness of these findings, the admitted facts are being observed as follows:
(1) The appellant claimed the preferential rate of BCD @ 5% under entry No. 358 (1) of Notification No. 46/2011.
(2) At the time of assessment, since original certificate of origin could not be produced that the provisional assessment was resorted to and the appellant was made to pay the duty @ 7.5%.
(3) Amount of Rs.15,09,146/- (equal to 2.5% of duty) was paid under the provisional duty bond pending verification of original certificate of origin.
(4) The benefit of the aforesaid notification was extended to the appellant at the time of final assessment after considering the authenticity of the certificate of origin submitted by the appellant.
(5) The aforesaid amount has been shown by the appellant as recoverable in the books of account.
The said fact is otherwise very much apparent from Note No.10 to the audited financial statement of FY 2017-18 under the head "other loans and advances". The said document is opined to be a sufficient document to ascertain whether the incidence of duty has or has not been passed on to the customers as the cost of the product because the books of account are the only way for examining the same. If an amount is shown in books of accounts as cost of material the amount has to be debited from the cash account and has to be credited towards expenses of materials account in the profit and loss statement. On the other hand, if the burden of duty has been borne by the manufacturer itself, the amount shall be debited in the cash account and a credit as receivables shall be shown in the books of accounts. Such entry will also be sufficient to hold that the manufacturer is expecting this amount as refundable to him from the department. It has been settled by catena of judgments that if an amount is still lying outstanding or is shown as receivables in the books of accounts, in that case it cannot be said that the assessee has received the amount from its buyers. The question of attraction of provisions of unjust enrichment does not at all arise. I draw my support from the decision of this tribunal in the case of Uniword Telecom Ltd vs CCE, Noida [2017 (358) ELT 666 (Tri-All.)]. Also once it is an admitted fact that duty has been collected in excess from the appellant during pendency of finalization of provisional assessment, the same has to be returned to the assessee once his books of accounts are showing such an excess duty paid as receivable. The same is the sufficient evidence for the fact that incidence of duty has not been passed on by the assessee/manufacturer from the end customers of the product manufactured. I draw the support from the decision of the Tribunal in the case of Savita Oil Technologies Ltd vs CCE, Belapur [2017 (358) ELT 331 (Tri-Mumbai)].
Learned Commissioner while rejecting the appeal has relied upon the decision of M/s HPCL (supra). I observe that the facts of the present case are absolutely in contrast from the said decision. In M/s HPCL case, the assessee had shown the amount as was prayed to be refunded by him, as expenditure in his books of accounts. It has been held in the said decision that once the amount has been shown as expenditure and not as receivables it definitely becomes the case of unjust enrichment. Admittedly, in the present case, the amount in question was shown as recoverable/receivables. The bar of unjust enrichment is therefore held to have wrongly been invoked by the Commissioner (Appeals).
8.1 Similarly, the decision of Hon'ble Apex Court in the case of M/s Solar Pesticides Pvt Ltd (supra) has been wrongly applied to the facts of the present case which simply talks about the documents to be mandatorily provided in terms of section 27(1A) of the Customs Act to prove that there has been no unjust enrichment. As there have been sufficient documentary evidences in the form of books of accounts on record and thus the Commissioner (Appeals) has been held to have wrongly ignored the said document. In addition to those documents, there has been a certificate by the authorized auditor of the appellant produced on record certifying that the amounts as has been prayed to be refunded has been the receivables by the appellant, the incidence thereof has not been passed on to any other person. The said certificate has to be considered as comprehensive proof in respect of the fact that the burden of duty has not been passed on by the appellant to the respondent more so for the reason that the department has not been able to show that the certificate is incorrect or doubtful. The certificate has to be considered as the sufficient evidence to prove that present is in the case of unjust enrichment. I draw my support from the decision of this Tribunal-Hyderabad bench in the case of CCT, Hyderabad-GST vs UPL Ltd [2019 (3) TMI 816]. Keeping in view the same and also the fact that once the amount in question has been shown as receivable in accordance with the cost account principle such amount cannot be held to be one as being added to the cost of production. The decision of the Hon'ble Apex Court in M/s Solar Pesticides Pvt Ltd (supra) is therefore held to have been wrongly applied to the facts and circumstances of the present case.
In view of the entire above discussion, the findings of Commissioner (Appeals) while rejecting the refund of Rs.15,09,146/- which admittedly is an excess amount paid by the appellant, over and above his liability of paying BCD @ 5% in terms of Notification No. 46/2011 Entry No. 358(1), are held to be not sustainable. The order under challenge is accordingly, hereby set aside. Consequent thereto the appeal stands allowed.
(Pronounced in the open court on 03.09.2021)