Custom, Excise & Service Tax Tribunal
Dream Logistics Company India Pvt Ltd vs Commissioner Of Customs Mangalore-Cus on 14 March, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: C/20420/2014-SM, C/20422/2014-SM, C/20423/2014-SM, C/20424/2014-SM, C/20425/2014-SM, C/20426/2014-SM, C/20427/2014-SM, C/20428/2014-SM, C/20429/2014-SM, C/20431/2014-SM, C/20430/2014-SM, C/20432/2014-SM, C/20558/2014-SM, C/20751/2014-SM, C/20752/2014-SM, C/20753/2014-SM, C/20754/2014-SM, C/20756/2014-SM, C/20755/2014-SM, C/21378/2015-SM, C/21379/2015-SM, C/21380/2015-SM, C/21381/2015-SM, C/21401/2015-SM, C/21402/2015-SM, C/21588/2015-SM, C/21589/2015-SM [Arising out of Order-in-Appeal No. 496-502-2013 dated 26/12/2013 passed by Commissioner of Customs (Appeals), BANGALORE ] [Arising out of Order-in-Appeal No. 504-508-2013 dated 26/12/2013 passed by Commissioner of Customs (APPEALS) , BANGALORE ] [Arising out of Order-in-Appeal No. 458-2013 dated 29/11/2013 passed by Commissioner of CUSTOMS (Appeals) , BANGALORE ] [Arising out of Order-in-Appeal No. 451-456-2013 dated 29/11/2013 passed by Commissioner of CUSTOMS (Appeals) , BANGALORE ] [Arising out of Order-in-Appeal No. 274-277-2015 dated 20/03/2015 passed by Commissioner of CUSTOMS(Appeals), BELGAUM ] [Arising out of Order-in-Appeal No. 257-258-2015 dated 23/03/2015 passed by Commissioner of CUSTOMS (Appeals) , MANGALORE ] [Arising out of Order-in-Appeal No. 272-273-2015 dated 20/03/2015 passed by Commissioner of CUSTOMS (Appeals) , BANGALORE-I( Appeal) ] Dream Logistics Company India Pvt Ltd 'dream Chambers' Near Bus Stand YELLAPUR - 581359 KARNATAKA Appellant(s) Printex Exports India Pvt Ltd 'dream Chambers'near Bus Stand YELLAPUR - 581359 KARNATAKA Appellant(s) Ace Exports Apts No.303, Montreal Manor, No.10/03, Serpentine Road, BANGALORE - 560020 KARNATAKA Appellant(s) Ssta Logistics India Pvt Limited Row House No 1668,mango Meadows,goa Road,belgaum BELGAUM - 560001 KARNATAKA Appellant(s) V Doddappa Maruthi Nilaya,bellary Road, Sandur BELLARY - 583110 KARNATAKA Appellant(s) Mspl Ltd Baldota Enclave, Abheraj Baldota Road HOSPET - 583203 Karnataka Appellant(s) Versus Commissioner of Customs Mangalore-cus NEW CUSTOMS HOUSE PANAMBUR MANGALORE - 575010 KARNATAKA Respondent(s)
Appearance:
M.S. NAGARAJA, ADV M/S. T.RAJESWARA SASTRY & ASSOCIATES, NO.48, 11TH MAIN ROAD, BANASHANKARI II STAGE, BANGALORE 560070 For the Appellant T. RAJESWARA SASTRY & ASSOCIATAES.
# 48, 11TH MAIN ,BANASHANKARI, 2ND STAGE, BANGALORE - 560070 KARNATAKA For the Appellant For the Respondent Date of Hearing: 23/02/2017 Date of Decision:
CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 20329-20355 / 2017 Per : S.S GARG
These 27 appeals have been filed by various appellants involving common question. Therefore all the 27 appeals are being disposed of by this common order. The details of the cases are enumerated in the table below: Name of exporter Appeal No Shipping bill No & date Amount of refund (Rs) Order-in-original No/date Order-in-Appeal No. date Dream Logistics Co. (India)Pvt Ltd C/20751-20756/2014 412/10-22.4.10 2847771 14/13 dt 12.4.14 451to 456/13 dt 29.11.13 passed by Commr of Customs (Appeals) Bangalore Allowing Dept appeals 74/10 25.2.10 & 76/10 -3.3.10 1005659 15/13 dt 12.4.13 99/10 -5.2.10 & 102/10-11.2.10 706566 16/13 dt 12.4.13 7/10- 6.1.10 391653 19/13 dt 17.4.13 1330/09-31.12.09 & 1/10 2.1.10 361160 20/13 dt 17.4.13 Dream Logistics Co (India) Pvt Ltd C/20420, 20422, 20423, 20425, 20428/14 62/10-11.2.10 391107 27/13 dt 13.6.13 496 to 502.13 Cus (M) dt 26.12.13 passed by Commr of Customs (Appeals) Bangalore Allowing Dept appeals 103/10-11.2.10 492991 29/13 dt14.6.13 246/10 -20.3.10 & 316/10- 30.3.10 239170 32/13 dt 14.6.13 25/10 -15.1.10 1133212 38/13dt 10.7.13 95/10 3.2.10 211117 43/13 dt 9.7.13 1307/09-24.12.09 174784 44/13 dt 9.7.13 44/10- 27.1.10 11632 45/13 dt 10.7.13 Printex Exports India Pvt Ltd C/20424, 20429-20432/14 315/10-30.3.10 55511 25/13 dt 13.6.13 504 to 508/13 Cus (M)dt 26.12.13 Passed by Commr of Cus (Appeals), Bangalore allowing Dept appeals 96/10 15.3.10 178266 26/13 dt 13.6.13 1071/09- 4.11.09 58657 30/13dt 14.6.13 227/10 11.3.10 335808 31/13 dt 14.6.13 17/10 12.01.10 965814 41/13 dt 10.7.13 ACE Exports C/20558/ 2014 335/10-8.4.10 371131 22/13 dt 25.4.13 458/13 Cus (M) dt 29.11.13 Allowing dept appeal MSPL Ltd C/21588 & 21589/15 42/10 21.1.10 118547 59/13dt 29.8.13 272 & 273/15 Dt 20.3.15 Passed by Commr of Cus (Appeals), Bangalore allowing Dept appeals 1393-28.8.09 135138 294/13(R) Dt 8.10.13 274 to 277/2015 dated 20.3.15 Passed by Commr of Cus (Appeals), Bangalore rejecting Dept appeals SSTA Logistics (India) Pvt Ltd C/21378-
21381/15 114/10-30.3.10 54753 76/13 dt 23.12.13 129/09-23.12.09 253241 77/13 dt 23.12.13 117/10 & 118/10 Dt 1.4.10 105672 78/13 dt 23.12.13 68/10-18.2.10 109616 79/13 dt 23.12.13 V Doddappa C/21401 & 21402/15 145/10 28.4.10 411932 70/13 dt 23.12.13 257 & 258/15 dt 23.3.15 Passed by Commr of Cus (Appeals), Bangalore rejecting Dept appeals 67/10 18.2.10 194300 71/13 DT 23.12.13
2. Briefly the facts are identical in all the cases, that the appellants have entered into sales contracts with various buyers and exported iron ore fines/lumps under shipping bills on payment of customs duty and cess as per provisional assessments by the proper officer of customs during the relevant period as mentioned in the table above. The customs duty as applicable was paid on the FOB value as assessed by the Customs on the basis of the export documents submitted by the exporters and test reports as applicable. The provisional assessments were finalised by the proper officer in terms of Section 18(2) of the Customs Act 1962 on finalization of the assessment, based on the transaction value, the exporter is required to pay the deficiency or be entitled to refund of the excess duty paid in terms of Section 18(2) & (4) of the Customs Act 1962 along with interest from the date of expiry of three months from the date of finalization of assessment at the rate as specified in Section 27A of the Customs Act 1962. The appellant exporters submitted applications for refund of excess customs duty paid on the iron ore exported. The original authority has sanctioned the refund in the cases of M/s Dream Logistics Company Pvt Ltd, M/s Printex Exports India Pvt Ltd, M/s Ace Exports and M/s MSPL Ltd as mentioned in the table against which the department filed appeals before the Commissioner of Customs (Appeals) Bangalore. Further in the case of M/s SSTA Logistics (India) Pvt Ltd and Sri Doddappa, the adjudicating authority rejected the refund claims on the ground that the exporter has not submitted evidence of not passing on the burden of duty to the buyer and the exporter filed appeals before the Commissioner of Customs (Appeals) Bangalore. The Commissioner of Customs (Appeals) Bangalore has passed the impugned orders as mentioned in the table allowing the departmental appeals and rejected the appeals filed by the exporter on the ground that as per the CBEC Circular No 7/2008 Cus dated 28.05.2008, the Assistant Commissioner/Deputy Commissioner should examine the details of the balance-sheet and other related documents to ascertain whether incidence of duty was passed on to any other person and that the lower authority has not verified the books to decide whether incidence of duty has been passed on to the buyer. In the case of appeals filed by the exporter, Commissioner of Customs (Appeals) has rejected the appeals on the ground that the adjudicating authority has established that the appellants have failed to discharge the burden of proof that such excess duty has not been passed on to the buyer in terms of Section 27(1) of the Customs Act 1962 and that the appellants have not produced any evidence that the refund amount was shown as receivable in their books of accounts during the relevant period. Aggrieved by the impugned order passed by Commissioner (Appeals), the appellants have filed these appeals.
2. Heard both the parties and perused the records. Learned counsel for the appellants submitted that the impugned orders are not sustainable in law as the same has been passed by ignoring the binding precedent and also by misconstruing the provisions of Section 27 & 28 of the Customs Act 1962. He further submitted that the appellants have enclosed documents in support of refund claims such as copies of shipping bills, sales contract, final invoice, bank certificate of export and realization/BRC issued by the Banks, Chartered Accountant certificates certifying that there has been excess payment of the export duty and cess on the iron ore exported, work sheets for refund of excess duty etc. He also submitted that the particulars of iron ore exported is subject to specification of iron ore exported. The sale contracts contain the base price per MT of iron ore, price adjustment clauses i.e. Fe content in iron ore moisture, presence of other elements like phosphorous, sulphur, silica, alumina etc. Higher the Fe content, higher will be the price of the specified percentage and higher moisture and impurities and variation in size, the lower will be the price. The price of the goods is determined based on the testing and analysis at the Load Port and by the CIQ at the Discharge Port. In terms of the Contract and based on the Testing and Analysis Reports and Draught Survey Report, the Exporters have issued final invoices for the price of iron ore exported. The payment of the price as per Final Invoices is corroborated by the BRC. The Final commercial invoice shows the price of iron ore exported. The invoices do not contain any element of Customs duty on the exported goods. The Bank Certificate of Export and Realization/BRC issued by the Banks show the price received for the goods exported. There is no dispute with respect to the FOB value/transaction value of the export goods on which customs duty has been paid. Statutory documents clearly establishes that the Customs Duty paid by the Exporter has not been passed on to the foreign buyer. He further submitted that the exports are in accordance with internationally accepted commercial terms. In terms of the sale contracts, the exporter is required to bear all expenses including duties, taxes, etc. leviable on the goods till the goods are delivered FOB, the vessel. The terms of sale contracts specifically state that the fee levied on export of iron ore in the country of origin shall be to the account of the seller. Learned counsel for the appellant also referred to various terms and conditions and various other clauses as provided in the sale contract to show that customs duty has not been paid by the foreign buyer and has been borne by the exporter only. He also submitted that the CBEC circular 18/2008-Cus dated 11.10.2008 has clarified that for purposes of calculation of export duty, the transaction value, that is to say the price actually paid or payable for the goods for delivery at the time and place of exportation under Section 14 of the Customs Act, 1962 shall be the FOB price of such goods at the time and place of exportation under Section 14 of the Customs Act 1962 shall be the FOB price of such goods at the time and place of exportation. He further submitted that sale contracts, export documents, etc clearly bring out that the duty was paid on the FOB value/price of the export goods, the duties and taxes were to the account of the seller, etc and the same fact is further certified by the C.A. Therefore, the seller/exporter has borne the duty in its entirety. There is neither any evidence to the contrary nor is any further proof required to establish that the exporter has borne the burden of duty paid on the export goods and the same has not been passed on to the buyer. In support of his submission, the learned counsel relied upon the judgements of the Honble High Court of A.P in the case of Asia Pacific Commodities Ltd Vs Assistant Commissioner of Customs, Kakinada [2012(280)ELT 481(A.P.)] wherein the Honble High Court has analysed the identical issue. The relevant part of the judgement is reproduced below.
21.?As per the above clause all export duties, taxes, levies etc., on cargo present or future in India shall be for sellers account and all import duties, taxes, levies etc., present or future in the country of destination shall be for buyers account. Further all taxes/duties on freight and vessel is to vessel owners account. Buyers obligations are found in Part B of FOB contract. As per point B2 read with B6 the buyer must obtain any import license where applicable and pay all customs formalities for the import of goods and where necessary for their transit through any country. From a perusal of the FOB contract terms in Incoterms, there cannot be any doubt that it is always the duty and obligation of the seller to bear the costs of customs formalities as well as the duties, taxes and charges payable upon export.
22.?In these appeals, the invoice value is also FOB value. Therefore it cannot be said to include the duty paid under the Cess Act and, therefore, the presumption under Section 28D of the Act stands rebutted by the appellants. The CCE (A) went utterly wrong in construing the point A6 ignoring paragraph 14 of Incoterms as well as the sale contract between the appellant and buyer. Therefore the CESTAT was justified in holding that the finding of CCE (A) that FOB value included the cess is unsustainable. We accordingly hold that the principle of unjust enrichment does not bar the refund claims under Section 27 read with 28D of the Act and the point is accordingly answered in favour of the appellants.
Learned counsel for the appellant also placed a copy of the INCOTERMS which was referred to by the Honble High Court of A.P. in the case of Asia Pacific Commodities and the same are applicable for export of goods on Free on Board basis. He also submitted that as per the terms of INCOTERMS, the exporter is obliged to pay the duties, taxes etc. imposed on the export goods on his own account and place the export goods Free on Board the vessel for the purpose of export. The presumption under Section 28 of the Customs Act 1962 has been effectively stands rebutted by the appellant. The learned counsel further placed reliance in the case of Muneer Enterprises Vs CC Bangalore vide Final Order No 20890-20893/2015 dated 27.03.2015 which relied on the decision of the Honble A.P. High Court in the case of Asia Pacific Commodities Ltd (supra) and held that when iron ore was exported on payment of duty on FOB value the refund of excess customs duty paid does not attract bar of unjust enrichment. On the other hand the learned A.R. defended the impugned order and submitted that the bar of unjust enrichment is applicable in all these cases because the appellants have failed to prove that the incidence of duty has not been passed on the buyer. He further submitted that in few cases, the certificate produced by the Chartered Accountant mentions the fact that the excess duty paid has been shown as receivable in their balance sheet whereas in other cases, the certificate produced by the Chartered Accountant only states that the Customs duty paid has been shown as expenditure in Profit and Loss Account. In support of her submissions, she relied upon the following decisions:
1) Hindustan Petroleum Corpn Ltd Vs CC (Imports), Mumbai [2015(328)ELT 490 (Tri-Mum)]
2) Madhucon Bina Puri Vs CC (Prev) Mumbai [2015(320) ELT458(Tri-Mum)]
3) HPCL Vs CC Mumbai [2015(317)ELT 379(Tri-Mum)]
4) CCE Nashik Vs Raymond Ltd [2015(316)ELT 129(Tri-Mum)]
5) CC (Exports) Chennai Vs BPL Ltd [2010(259)ELT526(Mad)
6) Philips Electronics India Ltd Vs CCE Pune [2010(257)ELT 257(Tri-Mum)] She further submitted that in all the cases relied upon by her, the bar of unjust enrichment was held to be applicable and it has been held that the amount was shown as expenses in their profit and loss account for the relevant period as certified by the Chartered Accountant, it must have been entered into the price of the goods manufactured by them, the situation would fit well in the context that the goods were sold on cum duty price by the assessee and their customers and consequently the burden of duty would be deemed to have been passed on to the buyer of the goods. She further submitted that the appellants have failed in getting over the bar of unjust enrichment by proving that the incidence of the duty paid by them had not been passed on to their customers.
3. After considering the submissions of both the parties and the perusal of the judgements cited by both the parties I am of the view that the impugned orders are not sustainable in law. Further, I find that the exporters have proved that they have not charged any duty of customs on the FOB price paid by the buyer. From the documents produced by the appellant, namely the sale contract, final invoice, bank certificate of export and realization issued by the bank, it is clearly proved that he has not charged any customs duty from the buyer. It is further noted that the export in the present case is in accordance with internationally accepted commercial terms and a copy of the contract has also been brought on record which contain the terms and conditions and one of the common condition I find in all the sale contracts is that the duty or tax in the country of origin or in the country of destination to be imposed during continuance of this contract increasing the cost of ore to be delivered herein. The same shall be paid by the seller to the extent imposed by the country of origin and by the buyer to the extent imposed by the countries of destination. The invoices show the price for the export goods and the export duty is paid on the price or FOB value of the export goods and invoices do not include the customs duty paid by the exporter. Further the judgments of the Honble High Court of A.P in the case of Asia Pacific Commodities Ltd., cited supra is squarely applicable in the present case and the Honble High Court has analyzed the contract of sales in such cases and has come to the conclusion that the export duty is borne by the seller and is never borne by the buyer. Further the judgement of the Honble High Court has also been followed by this Tribunal in Muneer Enterprises as cited supra wherein this Tribunal has held that when the iron ore was exported on payment of duty on FOB value, the refund of excess customs duty paid does not attract bar of unjust enrichment. Further, I find that the case laws relied upon by learned A.R are not applicable in the facts and circumstances of the present case. All the case laws are in the context of Section 11B of the Central Excise Act except the case of Commissioner of Customs Chennai Vs BPL decided by the Honble High Court of Madras which is under the Customs Act. Even this judgement is in favour of the appellant. Though this judgements relates to import of goods in para 7 of the judgement, the Honble High Court has observed as under:
7.?Section 27 of the Customs Act 1962 provides for the claim for refund of duty. A perusal of the said provision would show that the importer will have to satisfy the authorities while seeking such a claim. In other words, until and unless the importer satisfies the authorities with relevant documents, indicating the fact that it has paid the excess amount and the duty has not been passed on to the customers, such a claim cannot be accepted. Further Section 28C and D of the Act provide for price of goods to indicate the amount of duty paid thereon and presumption that incidence of duty has been passed on to the buyer. Therefore, until the contrary is proved, there is a presumption provided under the statute that the duty has been passed on to the buyer. The above said provisions would clearly establish the fact that it is for the importer to satisfy the authorities that the duty has not been passed on to the buyer and the excess payment had been made by him by absorbing the same. Therefore in view of my aforesaid discussion, I am of the considered view that impugned orders are not sustainable in law and I set aside the impugned orders by allowing the appeals with consequential relief if any as per law.
(Order pronounced in Open Court on )
S.S GARG
JUDICIAL MEMBER
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