Customs, Excise and Gold Tribunal - Delhi
Sipani Automobiles Ltd. vs Cc (Appeals) on 8 April, 2004
Equivalent citations: 2004(95)ECC347, 2004(176)ELT807(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in this Appeal, filed by M/s. Sipani Automobiles Ltd., is whether the refund of Customs duty paid by them is available to them and whether bar of unjust enrichment is applicable.
2.1 Shri Krishna Kant, learned Advocate, mentioned that the appellants imported parts of motor vehicles for manufacture of Montego cars under 32 Bills of Entry; that as the Customs Authorities were of the view that they had in fact imported cars in terms of Rule 2(a) of the Rules. For interpretation of the Schedule to the Customs Tariff Act, the benefit of Notification No. 72/93 was denied and they were asked to pay an additional duty @ 15%; that the Appellate Tribunal vide Final Order Nos. 745 to 769/96-B dated 10.9.96 [CC, Bombay v. Maruti Udyog Ltd. and Sipani Automobiles Ltd. v. CC, Bangalore, 1996 (16) RLT 646 (CEGAT) held that they are eligible for the benefit under Notification No. 72/93-Cus., that immediately after the receipt of the Final Order, they filed the refund claim on 28.9.1996 for refund of the Customs duty paid in excess by them and the redemption fine deposited by them; that the Assistant Commissioner, under Order-in-Original No. 203/97 dated 5.5.1997 rejected the refund claim in respect of two Bills of Entry Nos. 660 dated 5.7.94 and 996 dated 29.9.94 as the same were not part of the Final Order passed by the Tribunal; that the Assistant Commissioner allowed the remaining refund claim but ordered amount of refund to be credited into the Consumer Welfare Fund on the following grounds:
(a) Overheads Rs. 1,07,381 per car had been claimed without furnishing details/receipts of each and every item of overhead. In the absence of these details, overhead is permitted @ 10% of the total value of the imported materials and they would stand to gain a sum of Rs. 46,18,564 and consequently they had gained Rs. 46 lakhs by sale of the car and accordingly the loss shown by them is not correct.
(b) They had not furnished individual sale voucher for each car and they had also not furnished as to how many cars were manufactured out of imported raw materials as they had imported materials for 128 cars whereas they had sold 143 cars.
(c) They had not furnished number of gear box, engines, components, bodies etc., still remained unused and lying in the factory. 2.2 He, further, mentioned that the Commissioner (Appeals) also, under the impugned Order, rejected their Appeal on the ground that value of parts and components doss form parts of their finished product that is car and, therefore, duty paid on such components/parts is indirectly passed on to the consumer without doubt and hence incidence of duty paid had been passed on to the buyers and that mere Certificate of Chartered Accountant is not sufficient to discharge the onus cast to establish that duty burden has not been passed on.
3.1 The learned Advocate submitted that the refund of duty has been claimed with regard to the relevant Bills of Entry relating to the imported materials; that the Final Order dated 10.9.96 passed by the Tribunal mentions that "for Customs classification purposes, the goods have to be deemed to be 'cars' as a result of the legal fiction' but for the practical purposes, they remain components, assemblies or sub-assemblies" and M/s. Sepani Automobiles are entitled to the benefit of Notification No. 72/93-Cus.; that it is thus apparent that the Tribunal's Order is applicable to all the components imported by them; that accordingly, sanction of excess duty paid by them cannot be denied to them.
3.2 He, further, submitted that the principles of unjust enrichment is not applicable to the refund of duty claimed by them; that the Appellants had produced the Chartered Accountant's Certificate indicating the overheads to be 30%; that the Chartered Accountant has given the certificate only after satisfying the correctness thereof with reference to the evidence on record; that the Department cannot dismiss the Certificate summarily without bringing any material on record as to why overheads @ 30% was not acceptable; that further the Department had not furnished any detail as to how normally the overheads would be 10%; that there is no reason for any assumption and presumption while determining tax liability; that they have also submitted a statement giving details of total cost and sales realization of Montego cars wherein the Customs duty, the refund of which is claimed by them, is not mentioned; that they had supplied details of 143 cars alongwith their reply which had not at all been considered in the proper perspective by the lower Authority. The learned Advocate relied upon the decisions in the case of CC Madras v. Ayyappan Textiles Ltd., 2002 (149) ELT 234 (T) wherein the Tribunal has held that the Department has to consider the question whether the Certificate given by Chartered Accountant is sufficient evidence in support of their claim that the incidence of duty had not been passed on to customers. Reliance has also been placed on the decision in the case of Continental Chemicals India Ltd. v. CCE, Ghaziabad, 2003 (85) ECC 461 (T) : 2003 (152) ELT 183 (T). Finally the learned Advocate submitted that the excess duty paid by the Appellants @ 15% has been treated by them as amount receivable by the Company and the same was reflected in the Balance sheet as "Loans and Advances." He had referred to the Balance Sheet of the Appellants for the year ended 31.3.1996 wherein clearly the impugned amount has been shown as deposit with Customs and mentioned that the Chartered Accountant has also mentioned in the Certificate that the amount of additional duty paid as per the assessment is receivable by the Company, which was treated as advance deposit under the Head Current Assets, Loans and Advances to the Financial Statement for the respective years; that it has been held by the Appellate Tribunal in the case of Jaipur Syntex Ltd. v. CCE, Jaipur, 2002 (143) ELT 605 (T) that the incidence of duty has not been passed on to the customs when the Appellants therein had shown the disputed amount as claim receivable in the balance sheets and the figures had been certified by the Chartered Accountant.
4. Countering the arguments, Mrs. Charul Burnwal, learned Senior Departmental Representative submitted that admittedly the refund claimed in respect of customs duty paid on the goods covered by two Bills of entries in question is not admissible to them as the said assessment was not challenged; that those Bill of Entry were not subject matter of Final decision passed by the Tribunal allowing them the benefit of Notification; that the Constitutional Bench of the Supreme Court has held in Mafatlal Industries Ltd. v. Union of India, 2002 (83) ECC 85 (SC) : 1997 (89) ELT 247 (SC) that "Where a duty has been collected under a particular order which has become final, the refund of duty cannot be claimed unless the order (whether it is an order of assessment, Adjudication or any other order under which the duty is paid) is set aside according to law."
5. The learned Senior Departmental Representative further, submitted the onus of proof is on the Appellant to prove that the incidence of duty has not been passed on to the consumer; that they have not discharged this onus; that they have not been able to explain as how they had manufactured 143 cars when they had cleared 140 car bodies alongwith other components and as such they had not related the number of car manufactured from the imported materials with reference to body, engines, gear box, components, etc. in detail; that the Appellants have also not explained the overhead per car which is highly excessive; that no details of the so-called overheads has been furnished by them; that they had incurred loss while selling the cars is immaterial to arrive at a conclusion as to whether incidence of duty has been passed on by them to others; that it has been held by the Tribunal in the case of CCE, Mumbai v. F.C.P. Ltd., 2003 (59) RUT 337 (CEGAT) that the final product of which the inputs "form a component may have been sold at the same price prior to or subsequent to levy of duty does not by itself lead to the inescapable conclusion that incidence of duty has not been passed on ..... We are mindful of the observation of the Supreme Court in paragraph 91 in its judgment in Mafatlal Industries v. Union of India ...... that normally no manufacturer would observe the duty incidence of the goods that he makes even if he does not make a profit." She finally contended that as the duty at enhanced rate was paid by them, it is to be presumed that the Appellants have passed the incidence of the said duty also to their customers as the said duty was paid on the imported materials which were used in the motor cars manufactured and sold by them. In reply, the learned Advocate submitted that they have furnished the details of each and every car manufactured by them and the Chartered Accountant had given certificate only after referring to their books of accounts; that if the number of cars manufactured is more, the overhead expenses will come down; that in their case as the number of cars manufactured in quite small, the overhead expenses are bound to be high.
6. We have considered the submissions of both the sides. It is not in dispute that the refund of duty has arisen consequent to the Final Order dated 10.9.96 passed by the Appellate Tribunal in the favour of the Appellants. The duty paid by them in excess under two Bills of Entry in question were not included in the matter before the Tribunal. This has been fairly admitted by the learned Advocate for the Appellants. Thus, the assessment of duty on the said two Bills of Entry had attained finality as the same had not been challenged by the Appellants in the appropriate appellate Forum. So long as the assessment stands the duty cannot be claimed as refund on the ground that in respect of similar Bills of Entry, the Tribunal has extended the benefit of Notification No. 72/93. We, therefore, reject the Appeal as far as it relates to the disallowance of refund claim in respect of two Bills of Entry No. 660/5.7.94 and 996/29.9.94.
7. It is settled law that the presumption is that the incidence of duty paid on raw material must have been passed on by the manufacturer to the customers of its final product and it is to be proved by the manufacturer that the incidence of duty had not been passed on. This presumption is a rebuttable one. The Appellants in the present matter has produced a Certificate dated 24.12.96 from the Chartered Accountant wherein the cost structured of a montego car was given and it included "selling, general and other overheads" also. Except alleging that the overhead, is on the higher side, Revenue has not brought on record any material in support of that contention and to falsify the Certificate given by the Chartered Accountant. The Chartered Accountant has given the Certificate after verifying the books of accounts produced and information furnished to them. The Revenue has to controvert the Certificate by adducing material or evidence based on records. It cannot simply brush aside the Certificate by observing that the details of overheads were not furnished. The Revenue cannot arbitrarily fix the percentage of overhead. The learned Advocate has also produced a copy of the audited balance sheet alongwith schedules and notes of 31.3.1996 according to which the amount of refund claimed by them has been shown as Customs Deposits under the Head "Loans and Advances" and has contended that this goes to show that the incidence of duty was not passed on to their customers. In the case of Jaipur Syntex Ltd. v. CCE, Jaipur, supra, the Tribunal has held that the Appellants are entitled to receive the refund amount for having not passed on the incidence of duty to the customers as "the Appellants have produced all the balance sheets.... Wherein the disputed amount has been shown as claim receivable," and "all the figures had been duly certified by the Chartered Accountant." Following the said decision, we hold that the Appellants are entitled to get the amount of refund sanctioned to them by the Adjudicating Authority. 8. The Appeal is thus partly allowed.