Custom, Excise & Service Tax Tribunal
M/S Century Enka Ltd vs Commissioner Of Customs (Import), ... on 25 July, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. IV Appeal No. C/55/2006 (Arising out of Order-in-Appeal No. 598/2005/MCH/DC/2BII-04 dated 5.12.2005 passed by the Commissioner of Customs (Appeals), Mumbai). For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Century Enka Ltd. Appellant Vs. Commissioner of Customs (Import), Mumbai Respondent Appearance: Shri Prakash Shah, Advocate with Shri Prasad Paranjape, Advocate for Appellant Shri M.S. Reddy, Dy. Commissioner (AR) for Respondent CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 25.07.2014 Date of Decision: 25.07.2014 ORDER NO. Per: Shri Anil Choudhary
This appeal filed by M/s Century Enka Ltd. has been preferred against Order-in-Appeal No. 598/2005/MCH/DC/2BII-04 dated 5.12.2005 passed by the Commissioner of Customs (Appeals), Mumbai.
2. The brief facts are that the appellant, M/s Century Enka Ltd., are engaged in the manufacture of Polyester filament yarn. With respect to 5 Bills of Entry filed between October, 1986 and May, 1988 for import of Spin Finish Oil, the dispute with respect to the exemption under Notification No. 51/86 dated 17.2.1986, came to be finally settled in favour of the appellant by final order No. 159 to 162/93-C dated 21.5.1993 of this Tribunal. Consequently, the appellant filed refund claim for refund of Rs.24,00,891/- being the differential duty of customs. The said refund claim was allowed by Order-in-Original dated 27.4.1994, but the amount was ordered to be credit to the consumer welfare fund by invoking the principles of unjust enrichment. The appellant successfully challenged the order dated 27.4.1994 in Writ, which was set aside by the Hon'ble Bombay High Court vide its order dated 29.4.2004. That pursuant to the remand by the Hon'ble High Court vide its aforementioned order, after a detail hearing and examining the issue of unjust enrichment in detail and on such findings, the Dy. Commissioner of Customs was pleased to sanction the refund of Rs.24,00,891/- and also observing that in view of the disbursement already received through the High Court vide interim order on furnishing of Bank guarantee and Bond, no further disbursement was needed and consequently the Bank Guarantee was cancelled and the personal Bond was also cancelled. For ready reference, the findings are quoted herein below: -
11. I have carefully considered the submissions made by the importer. It is the contention of the importer that the sale price of the polyester yarn prior to and post importation of the spin finish oil demonstrates that the price of the polyester yarn post import has fallen. It is further contended by the import that the cost of spin finish oil in the manufacture of polyester yarn is insignificant and the major raw materials are PTA/DMT and MEG which are petroleum based products. The price of the polyester yarn is generally governed by the cost of these main raw materials and the cost of spin finish oil is not taken into account for determining the sale price. The cost of spin finish oil does not impact the sale of polyester yarn. The importer has substantiated its claim that the duty of which the refund is sought by them is not passed on to the buyer of the polyester yarn by producing the certificates of the Chartered Accountant. The Chartered Accountants have certified the working of the cost price as well as the policy of fixation of sale price. Having regard to the explanation contained in the certificates, the incidence of higher customs duty on the imported finish spin finish oil was not included as cost in the sale price of the polyester yarn by the importer as it did not, in any way, influence the prices of the polyester yarn manufactured and sold by them in the market.
12. Having regard to the insignificant cost of the spin finish oil involved in the manufacture of the polyester yarn and having regard to the certificates of the independent Chartered Accountant and the explanation given by the importer, I am satisfied that the incidence of duty of which refund is claimed is not passed on to the buyer of the polyester yarn. I am further satisfied that the importer has not passed on the incidence of duty of which refund is claimed to the buyer of the polyester yarn from the comparative statement submitted by the importer of the sale price of polyester yarn prior to the subject imports and subsequent to the subject imports. I have found that the prices of the polyester yarn for the subsequent imports are lower than the prices of the polyester yarn prior to the subject imports. This is also demonstrated from the sale invoices submitted by the importer.
13. I further find that the contention of the importer is fully supported by the order of the Tribunal in the case of Commissioner of Central Excise, Mumbai-I Vs. Shethia Audio Video Pvt. Ltd. 2003 (161) ELT 453, I hold that, in the absence of any material produced by the department contrary to the certificates of Chartered Accountant and other material produced by the Importer, it is sufficient to satisfy me that, the burden of duty of which the refund is sought, is not passed on to any other person.
14. I am quite conscious that mere charging of the lower price itself may not be sufficient to discharge the burden that the incidence of duty is not passed on to the buyer of the goods. However, on a cumulative analysis of the documents and materials produced by the importer and the fact that the prices of polyester yarn is determined by the market forces based on demand-supply position and also the fact that the cost of spin finish oil has not formed part of the cost while considering cost of sale of polyester yarn and that the price of polyester yarn during the period was lower than the price of polyester yarn prior to import, I am satisfied that the importer has discharged its burden to show that incidence of duty of which refund is claim is not passed on to the buyers of the goods. 2.1 Being aggrieved by the order granting refund, the Revenue preferred appeal before the Commissioner (Appeals) on the ground that the Dy. Commissioner has relied on the Chartered Accountants certificate which states that the certificate is based on record, which itself is not conclusive proof that the burden of duty has not been passed on to the customers of the appellant. Further, the uniformity of price before and after consignment does not lead to inevitable conclusion that the incidence of duty has not been passed on to the buyers as because the uniformity of price may be due to various factors. The learned Commissioner (Appeals) vide the impugned order observed that the main raw material for production of polyester filament yarn is PTA/DMT and MEG, which are petroleum based product, the price of which is based on crude petroleum price in International market. Further, as per the appellant, price of polyester filament yarn depends on the market force that is demand and supply. Further, the appellant did not prepare cost sheet as it has no control to influence the price. Further, the consumption of spin finish oil in manufacture of polyester yarn is insignificant so far as the cost is concerned. Referring to the ruling of the Hon'ble Supreme Court in the case of Sahakari Khand Udyong Mandal Ltd., it was observed that the Apex Court has held that refund of duty is based on equity and even in absence of statutory provisions; the claimant has to prove that he had not passed on duty burden to any other person. As regards the Chartered Accountants certificate, where it is proved that the appellant has not passed on duty burden to any other person, it is settled position that the certificate of Chartered Accountant is itself, not supported by any documentary evidence, does not prove that the duty has not been passed on to any other person. So far the contention of the assessee/appellant that the prices have fallen of the polyester yarn, hence unjust enrichment is not applicable, is not acceptable in view of the decision of the Apex Court in the case of Allied Photography Ltd. The sale price may be used as corroborative evidence but not as substantive evidence on the point of unjust enrichment. On the aforesaid observations, the appeal of the Revenue was allowed and the order of the Dy. Commissioner sanctioning the refund was set aside. Being aggrieved, the appellant is in appeal before this Tribunal.
3. The Counsel for the appellant assessee states that the certificate of Chartered Accountant was submitted at the behest of the Revenue being in compliance with the Public Notice No. 121 dated 9.11.1991. It is further submitted that the Dy. Commissioner, in his order, sanctioning refund has given detail findings after going through the relevant records, such as the cost of impugned goods (spin finish oil) was not taken into account for determining the sale price of the finished goods as the matter of policy and comparative statement of sale price of finished goods, prior to and subsequent to import of impugned goods and Chartered Accountants certificate have been considered and thereafter accepted by the Dy. Commissioner.
3.1 He further states that it is not the case of the Department nor finding of the learned Commissioner (Appeals) that Chartered Accountants certificate is issued arbitrarily or is incorrectly issued. It is also not the case of the learned Commissioner (Appeals) that any specific evidence asked for by him was not provided before him.
3.2 It is further contended by the appellant that the certificate of Chartered Accountant submitted on direction of the Revenue is reliable unless the same is found contrary to the facts, which is not the case herein. The appellate authority have erred in observing that the refund is granted relying on the Chartered Accountants certificate only, which is not the fact obtaining from the record. The appellant further draws my attention to Circular No. 18/2010-Cus dated 8.7.2010, wherein the CBEC has clarified that with respect to CVD, the field formation shall accept certificate of the Chartered Accountant to satisfy itself that the burden of duty is not passed on to any other person and further clarified that there is no need for insisting on production of balance sheet or profit and loss account. Thus, he prays for setting aside the impugned order and restoring the order of the Dy. Commissioner sanctioning refund.
4. The learned Dy. Commissioner (AR) appearing for the Revenue relies on the impugned order. He further relies on the ruling of this Tribunal in the case of Commissioner of Customs, Mumbai Vs. Eltech Enterprises 1999 (112) ELT 877 (Tri) wherein it was considered whether the incidence of duty is passed on and it was held that the Chartered Accountants certificate produced, not supported by relevant invoices or document, is in itself not sufficient to show that the burden of duty has not been passed on.
5.1 Having considered the rival contentions, I find that the Dy. Commissioner has taken notice of the following documents, namely: -
(i) Comparative statement submitted by the assessee as to the sale price of the polyester yarn prior to the subject import and subsequent to the subject import.
(ii) From the sale invoice of the finished products, it is demonstrated that the price of polyester yarn subsequent to import are lower than the price of polyester yarn prior to the subject imports.
(iii) Certificate from the Central Excise authority that the importer has not availed of the proforma credit under Rule 56A/57A of the Central Excise Act, 1944.
(iv) End use certificate issued by the Central Excise authority.
(v) The certificate of Chartered Accountant submitted in compliance with the Public Notice.
(vi) Copy of the Bills of Entry.
(vii) No proforma credit certificate (5 Nos.) dated 22.7.1992 issued by the Range Superintendent of Central Excise of the appellants factory.
(viii) Balance Sheet of relevant year in which the disputed duty was paid.
(ix) Sale invoice of final product of pre and post importation.
(x) Declaration that the goods were not sold on High Seas Sale Basis etc. 5.2 Further, in view of the detailed categorical finding recorded by the Dy. Commissioner after examining the various documents on record in addition to the CA's Certificate , the refund has been allowed by a speaking order holding that unjust enrichment is not attracted in the facts and circumstances of the case. Further, I find that the appellate order is non-speaking order and the refund sanctioning order has been set aside only taking notice of the grounds of appeal without recording or indicating a single finding of the Dy. Commissioner to be perverse. Thus, I set aside the impugned appellate order and restore the order of the Dy. Commissioner dated 20.7.2005 granting refund. Thus, the appeal is allowed in favour of the appellant with consequential relief, if any.
(Dictated and pronounced in Court) (Anil Choudhary) Member (Judicial) Sinha 8