AI Structured Summary
Not yet generated for this judgment
Judgment
After hearing both sides duly represented by Shri Prabhat Kumar, learned advocate appearing for the appellant and Shri A.K. Jain, learned AR
appearing for the Revenue, we find that appellant imported items declared as “CD†pick up lense Unit and a part of CD Deck apparatus picture
be assembly’ in terms of provisions of Customs (Import of goods at concessional rate of duty for manufacture of excisable goods) Rules, 1996
read with Notification No. 29/99-Cus dated 28.2.99. Revenue entertained a view that inasmuch as the goods imported by the appellant were not parts
as claimed by them and the same were complete CD Deck mechanism & proposed to deny the benefit of notification in question. Accordingly,
proceedings were initiated against them resulting in passing of an order passed by the adjudicating authority holding against them. However, it is seen
that said order of the adjudicating authority was set aside by Commissioner (Appeals) who held that the respondents are eligible for benefit of
notification.
On receipt of order of Commissioner (Appeals), appellant filed a refund claim of duty of Rs.35,91,820/- paid by them at the time of clearance of
imported goods, under protest.
It is seen that said order of Commissioner (Appeals) was challenged by the Revenue before the Tribunal and Tribunal vide its final order No.
C/310/08 rejected the appeal filed by the Revenue by holding that the assessee was entitled for exemption in terms of notification in question. It was
also observed by the Tribunal that duty was paid by the assessee at the time of clearance of the goods, under protest. For better appreciation, we
reproduce the relevant part of the said order.
“3. When the matter was heard on earlier occasions, we directed the Departmental Representative to produce the original clearance
documents to see whether the claim of the importer that they have claimed the benefit of Notification No. 25/99 and the payment of higher
duty was under protest. The original documents produced by the DR indicated the following remarks:
“Sir, Party has produce the Central Excise Certificate For the Benefit against Ntfn. No. 25/99. However the Benefit of ntfn Not given to
Party. Therefore Party is paying Full duty under PROTEST.
Therefore, we are of the view that the duty has been paid by the importer under protest.â€
In view of the above, there is no dispute on merits of the case that importer was entitled to the benefit of notification and was entitled to duty free
clearance. However, they paid the duty under protest for clearance of the goods. The claim for refund of duty paid by the appellant under protest
stand rejected by the lower authorities on the ground of unjust enrichment. As such, the only issue required to be decided in the present appeal is as to
whether the appellants have collected this extra duty from their customers and has to be hit by provisions of unjust enrichment or they themselves
absolve said duty so as to hold that same does not stand recovered by them from their customers.
It is seen that the period involved in the present appeal is from September, 2003 onwards i.e. from October, 2003 to March, 2004. The appellants
have taken a categorical stand before the lower authorities that the average sales price for two period i.e. from July to September, 2003 and from
October, 2003 to March, 2004 are the same, and is further lower in the subsequent period. The final product was being sold by the appellant at
Rs.123/- during the period prior to period involved in the present appeal. The sale value of the same came down to Rs.114.40 per piece during the
relevant period, i.e. October, 2003 to March, 2004, when they paid the higher amount of duty on the imported parts. They have produced on record the
detailed chart showing the cost factor of their final product in respect of two periods. They have also placed on record a certificate from their
Chartered Accountant indicating that duty paid by the appellant was not recovered by them from their customers inasmuch as the selling price of the
goods came down to Rs.114.40 which was less than the cost of manufacture. In such a scenario, the appellant contended that question of recovery of
excess duty paid by them on the parts cannot arise.
As we have already observed the question required to be decided in the present appeal is as to whether the duty paid by the assessee at the time of
import of goods stand collected by them from their buyers so as to make themselves unjustly enriched. The appellants have strongly relied upon the
certificate of Chartered Accountant. We are reproducing the same for better appreciation.
“TO WHOMSOEVER IT MAY CONCERN
We have gone through the Purchase, Manufacturing and sales record of M/s. Overseas Business Corporation having its factory at A-30,
Sector -16, NOIDA (UP) and after perusal of all above we hereby certify the following:
That during April, 2003 to Sep’2003, the firm had been importing CD Pick Up Lense Unit at Concessional Rate of Duty of
5%+16%+4% and the cost of Manufacturing per unit of CD Deck Mechanism works out to be Rs.110.50 per piece as detailed in enclosed
chart. The average basic selling price per piece of CD Deck Mechanism during this period was Rs.130.84 paisa. According the firm was
earning a gross margin of 15.55% on its sales value.
That during Oct’2003 to March’2004, the firm had imported CD Pick up Lense Unit at full rate of duty of 25%+16%+4% under
protest since Concessional rate of duty was denied to the firm vide B/E No. 366460 dated 30.09.2003, 367750, dated 29.10.2003, 368048
dated 04.11.2003, 368835 dated 18.11.2003, 369273 dated 25.11.2003, 369869 dated 05.12.2003 and 371187 dated 30.12.2003. The cost
of pick up lense unit works out to be Rs.123/- per piece as detailed in enclosed chart. The average basic selling price per piece of CD Deck
Mechanism during this period was Rs.114.40, which was less than the cost of manufacturing.
That as per above we conclude and certify that the impact of higher rate of duty paid by the party under protest on the above seven Bills
of Entries have not been passed on to any other party and have been fully borne by the firm itself.â€
As is seen from the above, Chartered Accountant has gone to the cost of per piece of their final product which comes to around Rs.123/- per piece
whereas the appellant was selling their CD mechanism during the relevant period at Rs.114.40 . The lower authorities have examined the above
Chartered Accountant certificate and has not been able to give any valid reasons to reject the same. Commissioner (Appeals) has referred to charts
placed on record by the assessee. In Chart No. 1, they have shown the landed cost of CD pick up lense unit as Rs.94.30 and total cost of CD deck
mechanism comes to Rs.110.50. In Chart No. 2 they have taken into consideration the higher landed cost of CD pick Up lense unit as Rs/109.49 i.e.
after payment of higher Customs duty. Whereas the sale price of the same was lesser than the manufacturing cost. The difference in the landed cost
of CD pick up lense unit has resulted in higher manufacturing cost. But the final product being cleared at lesser value, cannot be said to have included
the higher duty paid by the appellant.
Commissioner (Appeals) while examining the above two charts has held that appellant was adding landed cost of lense unit, which is inclusive of
customs duty paid by them. As such, he has further observed that where the appellant have sold the goods by including the higher duty paid, profit is
no consideration inasmuch they have themselves admitted that the customs duty was integral component of their landed cost.
We are of the view that the above reasoning of the authority is not worth acceptance. Merely because the importers, in the table produced before the
Commissioner (Appeals) has shown the landed cost of CD pick up lense unit as Rs.109.49 which is inclusive of higher duty paid by them, does not
mean that customs duty paid by them at the time of clearance of said pick up lense unit makes an integral component of their final product, which
stand sold at the price lower than the manufacturing cost which stands arrived at by then by including the higher landed cost of the imported goods.
The appellants have only tried to establish that after the higher duty paid cost of CD pick up lense is added in the manufacturing cost, the same comes
to Rs.123/- which is admittedly higher than the unit sale price of the goods in question. If that be so, the differential duty paid on the imported goods
i.e. CD pick up lense unit cannot be said to have been collected by the assessee from their customers.
The Commissioner (Appeals) also rejected their claim on the ground that appellant have neither shown the extra amount of duty as recoverable
from the department in their balance sheet nor they have brought any other documents to show that duty was not passed on to their customers. We
note that an identical reason was advanced by the Revenue before the Tribunal, in the case of Infar India Ltd. vs. Commissioner of Customss, New
Delhi [2002 (150) ELT 411 (Tri-Delhi) wherein it was held by the Tribunal as under:-
“The appellants have filed the certificates from the Chartered Accountant certifying that the customs duty element is not passed on to the
customers. None of the authorities below have found anything wanting in these certificates. The observation of the lower authorities that the
company in their balance sheet for the years 1995-96 did not indicate Rs.94,86,522/- as outstanding recoverable from customs on account
of excess duty as they were contesting the same with the department and therefore it can safely be concluded that they have included the
said excess duty amount in their costing and passed on the burden of said duty to third party is subjective, arbitrary and unreasonable. At
that time, the company was still contesting the levy of customs duty on the product imported by them in an appeal before the CEGAT. They
therefore, would not have known whether they would succeed in their appeal and if successful, consequently how much amount they would
get from the department as refund. It, therefore, would have been highly presumptuous on their part to reflect an amount in their books of
account as due from the customs department, the receipt and the quantum of which was still in limbo.â€
As such, we find that observations made by the appellate authority that the appellant has not shown this amount as due from the Revenue in their
balance sheet cannot be appreciated, in view of the Tribunal’s order.
At this stage, we may examine some of other precedent decisions as relied upon by the learned advocate. In the case of CCE vs. Manjunath Food
and Packaging P. Ltd. reported in [2009 (239) ELT A 22] it was held that as the duty was paid under protest, the question of unjust enrichment does
not arise. Hon’ble Supreme Court in the case of Living Media India Ltd. reported as 1998 (104) E.L.T. 3 (S.C.) has held that when the cost of the
raw materials for bringing out the news magazines exceeded its retail sale price, the principle of unjust enrichment becomes inapplicable. As already
discussed by us, if the higher cost of goods imported by the applicant is taken into consideration, the manufacturing cost of their final product increased
whereas retail sale price was decrease. This fact itself reflects upon only one situation that the extra cost of raw material has not been taken into
consideration by the importer at the time of fixing its retail sale price.
The appellants have admittedly placed on record the Chartered Accountants certificate certifying that differential duty does not stand recovered
by the appellant from their customers. Once the importer having discharged this burden, by placing on record Chartered Accountants certificate, the
burden gets shifted to the Revenue to prove by production of positive evidence that such extra duty paid by them stand recovered from their
customers. In the present case the Revenue has not advanced any evidence so as to effectively rebut the certificate on record. Such certificate
having been given by the Chartered Accountant, based upon the books of accounts maintained by the appellant, in the regular course of the their
business has to be given true credence and cannot be brushed aside merely on the basis of assumption and presumptions. For the same reasons, the
argument of the learned DR that no businessman sells the goods at a price less than the cost price cannot be appreciated inasmuch as it is an general
statement or impression. Such an information must come from records of the assessee to establish that the sale price was either equivalent to the cost
price or was more than that so as to establish that duty difference stand recovered from the buyers. Revenue has not disputed the fact that during the
relevant period the sale price of the goods was Rs.114/- per piece as per the certificate given by the Chartered Accountant. Whereas the cost price
was Rs.123. If that be so, the said certificate cannot be taken lightly and ignored on the basis of general business practice.
In the case of Collector of Central Excise, vs. Metro Tyres Ltd. [1995 (80) ELT 410 (Tri), it was held that even though the assessee issued
composite invoices not showing the duty element separately but such sale price of the goods before as well as after the event remained the same and
even when price increased, the same went up by an amount much less than the amount of duty /differential duty, it has to be concluded that the
incidence of higher rate of duty was passed on to the customers. In the present case, we note that the sale price of the final product, instead of going
up on account of higher duty paid by the appellant, has, in fact gone down. This stand explained by the ld. Advocate that on account of fast changing
technology in electronic goods, the models become obsolete and have to be cleared at lower prices on account of changing market trends. In such a
situation, it cannot be said that the higher duty paid by then at the time of imports, on an objections raised by the revenue, and when the importer has
won the issue on merits till the Tribunal level, is not required to be refunded to them especially when we notice that the same does not stand recovered
by them from their customers.
In view of the foregoing discussions, we are of the view that the appellant has not recovered said amount from their customers and as such, the
refund is not hit by provisions of unjust enrichment. Accordingly impugned order is set aside and appeal is allowed with consequential relief to the
appellant.
(Pronounced in the open court on)