Customs, Excise and Gold Tribunal - Bangalore
Collector Of Customs vs Ngef Ltd. on 13 February, 1995
Equivalent citations: 1995(58)ECR256(TRI.-BANGALORE)
ORDER
S. Kalyanam, Vice-President
1. This application is by the Department seeking stay of operation of the impugned order of the Collector of Customs, Bangalore, dated 13.10.1994. Since the issue lies in a short compass and is already covered by the rulings of the Tribunal and also the rulings of the Madras High Court and the Bombay High Court, I take up the appeal itself for disposal today with the consent of parties.
2. Sh. Venkatan, the learned DR contended that the issue relates to applicability of the doctrine of unjust enrichment for grant of refund to the respondent herein in respect of the duty paid on certain imported goods which were captively used by the respondent in their factory, the learned DR submitted that the ruling of the Bombay High Court and the Madras High Court are against the Department and the Department has taken up to the Supreme Court.
3. Sh. Subbayya, the learned Counsel submitted that as on data there is no stay by the Supreme Court and the Tribunal has already followed the rulings of the High Court and prayed for dismissal of the appeal.
4. On going through the entire record, I find that the issue with reference to the applicability of the doctrine of unjust enrichment has been considered by the Madras High Court in the case of M/s. Indo-Swiss Synthetic Gem Mfg. Co. Ltd. v. Collector of Customs and the High Court has held as under:
In the supplemental affidavit filed by the Petitioner, the Petitioner had categorically stated in detail with reference to the manufacture of synthetic gems by the use of silica crucibles and the Petitioner made it clear that the Petitioner does not sell silica crucibles and does not trade in these silica crucibles. They are meant solely for use in the Petitioner's factory for manufacture of synthetic gems and these crucibles are used as refractory goods which could withstand very high industrial temperatures, which is necessary for the manufacture of synthetic gems. While so, it is manifest that the Petitioner had not passed on the incidence of taxation on the customers or buyers. That bring the actual position, the ratio of the decision of the Bombay High Court in Solar Pesticides Pvt. Ltd. case (supra) is directly applicable to the present case. The Bombay High Court had in extcnso dealt with the effect of the amending provisions Section 27(2)(a) and (b) of the Act is very clear to the effect that the Petitioner is entitled to refund if such amount is relatable to the duty paid by the importer (a) if he had not passed on the incidence of such duty to any other person. As explained (supra) since the petitioner has not directly passed on the goods as imported to the Customers or buyers, the question of passing on the incidence of duty does not arise.
It is manifest from the aforesaid provisions that if the importer had not passed on the incidence of duty to any other person and the duty on imports made by an individual for his own personal use, importer is entitled to refund. The said provision contemplates a situation that if an importer of the goods, after clearing the goods on payment of duty, sells the same to third parties and that by virtue of such sale the importer passes on the incidence of such duty to any other person, then the importer is not entitled to refund. When the importer made use of the goods for his own personal use, the question of passing on the incidence of such duty does not arise. Hence the importer in such a situation is entitled to refund of duty. It appears that if the importer has made use of the imported goods for the manufacture of end-products, the imported goods get mixed with, in the process of manufacturing of end-product. It cannot be said that the importer has passed on the incidence of duty to third person, when the end-product is sold. Section 27(2)(a) does not contemplate such a situation. In the instant case, the Petitioner has made use of the silica crucibles in the process of manufacture of synthetic gems and the petitioner has not passed on the duty paid on the silica crucibles to third parties. In the judgment of the Bombay High Court in Solar Pesticides case (supra), the Court observed that the import duty paid on copper scrap may become a part of the cost of manufacture of copper oxy-chloride, but when the copper oxychloride is sold in the market, it is difficult to ascertain how much of the original import duty on copper scrap is passed on to the buyer of oxychloride and in what proportion; nor can thereby in such a case the kind of documentation required under the scheme and consequently the buyer of copper oxychloride cannot claim a refund of any part of the duty on copper scrap. In other words, where there is no sale of the goods which are imported and in the absence of any transfer of incidence of taxation directly by the sale of the imported goods as such to the buyer, the importer is entitled to claim benefit under Section 27(2)(a) and (b) of the Act.
5. The Bombay High Court also while dealing with the similar issue in the case of Solar Pesticides Pvt. Ltd. v. UOI reported in 1992 (57) ELT 201 has held as under:
Hence the entire scheme is designed for a situation where (1) the importer of goods after clearing the goods on payment of duty, sells these goods to others. In this process either he directly passes on the incidence of duty to his buyer or does not. Only in the latter case will the importer get the refund. Otherwise, the refund will go to the buyer or to the Consumer Welfare Fund as per the Sections (2). If the duty is passed on to the buyer, the right to recover the duty is also passed on to the buyer of the imported goods. Provided that the buyer has not in turn, sold these goods and passed on the duty to the next buyer (3) The converse situation contemplated is where the importer uses the goods himself. Here there is no question of passing on the incidence of duty to anyone else since the goods imported are not sold to any open else. Hence he can get the refund.
6. In the light of the above rulings of the High Courts and also keeping in mind that there is no stay granted by the Hon'ble Supreme Court, I uphold the impugned order and dismiss the appeal.
(Pronounced in open Court)