Legal principle

Under Section 28D of the Customs Act, 1962 read with Circulars 6/2008-Cus, 16/2008-Cus and 18/2010-Cus, a Chartered Accountant's certificate (from a CA who certifies the importer's annual accounts) that the burden of 4% SAD has not been passed on to the buyer is sufficient to rebut the presumption of unjust enrichment and entitle the importer to refund, and no other material can be insisted upon.

Court decision

The Karnataka High Court dismissed the Revenue's appeal, answered all three substantial questions of law in favour of the respondent-assessee and against the Revenue, and upheld the CESTAT's order directing refund of 4% SAD, holding that the CESTAT's application of Apple India Pvt. Ltd. did not call for interference. The court held that a certificate from a Chartered Accountant who certifies the importer's annual accounts, stating the burden of 4% SAD has not been passed on to the buyer, fulfills the requirement and discharges the statutory presumption of unjust enrichment under Section 28D.

Facts

M/s Festo Controls Private Limited imported goods and sold them in India, clearing the imports on payment of 4% Special Additional Duty (SAD), and then applied for refund of the 4% SAD after sale. The Assistant Commissioner (Refunds) rejected the refund applications on various dates (18.11.2009 to 24.04.2012), holding that the assessee failed to prove under Section 28D of the Customs Act that the duty burden had not been passed on to customers, and that conditions of Circulars 6/2008-Cus and 16/2008-Cus and para 2(b) of Notification 102/2007-Cus were unfulfilled. The Commissioner of Customs (Appeals) dismissed the assessee's appeals. CESTAT, Bengaluru, by Final Order Nos. 20159-20165/2024 dated 19.03.2024, held that a Chartered Accountant's certificate that the duty burden was not passed on was sufficient under Section 28D and directed refund of the 4% SAD. The Principal Commissioner of Customs appealed to the Karnataka High Court under Section 130 of the Customs Act, 1962.

Key provisions

• Section 28D, Customs Act, 1962 — Presumption that incidence of duty has been passed on to the buyer
• Section 130, Customs Act, 1962 —  Appeal to High Court