Legal principle

An importer discharges the unjust enrichment burden where a categorical Chartered Accountant's certificate that the duty incidence was not passed on is corroborated by the refund being shown as a receivable in the books and by sale prices unaffected by the CVD rate, and the department cannot accept such evidence for one period while rejecting the same evidence for another.

Court decision

The Tribunal allowed both appeals and set aside the Order-in-Appeal dated 26.07.2018, holding that the appellants had established beyond doubt that the burden of the enhanced CVD had not been passed down to the buyers, that the element of unjust enrichment was not present, and that the subject refunds were admissible to the appellants, with consequential benefit, if any.

Facts

M/s Akshar Telecom Pvt Ltd and M/s Trust Marketing imported mobile phones classifiable under CTH 85171290, paying CVD at 6% until 28.02.2015 and 12.5% thereafter, without the benefit of the reduced 1% rate under Notification No. 12/2012-CE. Relying on the Supreme Court's judgment in SRF Ltd vs Commissioner of Customs, Chennai (2015 (318) ELT 607 (SC)), they filed refund claims of Rs. 1,56,24,904 (Akshar Telecom) and Rs. 24,69,98,215 and Rs. 23,62,85,014 (Trust Marketing) for the periods October 2014–25.03.2015 and April 2015–17.07.2015. The department, by show cause notice dated 26.12.2015, proposed rejection on grounds of incomplete applications outside the section 27 period, non-claim of exemption at clearance, absence of payment under protest, limitation and failure to prove the duty was not passed on. The Order-in-Original dated 26.02.2016 rejected the claims on merits and limitation, and the Commissioner (Appeals) by Order-in-Appeal dated 26.07.2018 upheld admissibility on merits and limitation but held the appellants failed to discharge the unjust enrichment burden, directing the amounts to be credited to the Consumer Welfare Fund.

Key provisions

• Section 27, Customs Act, 1962 — Claim of refund duty
• Section 28D, Customs Act, 1962 — Presumption that incidence of duty has been passed on to the buyer
• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 28C, Customs Act, 1962 — Price of goods to indicate the amount of duty paid thereon