Whether C.A. Certificate is sufficient to prove that there was nounjust enrichment for claiming SAD refund?

PJ/Case Laws/2012-13/1520

Case:-Gujarat Boron Derivatives Pvt. Ltd. Vs. Commissioner of Customs, Ahmedabad

Citation:-2013(29) S.T.R. 443(Tri. -Ahmd.)

Brief Facts:- Appellant is seeking modification of stay order passed by this Tribunal vide which the appellant was required to deposit specific amount against each demand. The issue relates to refund of Additional Duty of Customs (SAD) filed by the appellant that is being rejected on the grounds of unjust enrichment.

Appellant’s Contention:- The ld. Counsel submitted that on the very same issue for a subsequent period, this Tribunal vide its Order has held that the refund claim is not hit by provisions relating to unjust enrichment and the facts and circumstances are same in this case as in the case considered by the Tribunal. He submits that in view of the fact that the issue has been decided finally in favour of the appellant on the same issue for a different period, the requirement of pre-deposit for consideration of appeal may be waived and stay order may be modified.

Respondent’s Contention:-The ld. AR submits that the requirement of pre-deposit already ordered need not be modified since in the case which was before the Tribunal in respect of which order was passed did not require any pre-deposit to be made since refund had not been sanctioned in that case. The appellants further submit that they may be required to make the deposit and thereafter the matter may be heard.

Reasoning of Judgment:-The Tribunal heard both the sides andconsidered submissions made by both sides. The appellant filed seven refund claims for additional duty of Customs (SAD) paid on the imported goods registration which were sold by them in the domestic market after payment of VAT. The refund claim has been filed in terms of Exemption Notification No. 102/2007-Cus., dated 14-9-2007, Notification No. 102/07 provides exemption by way of refund of special additional customs duty (SAD) paid by the appellant after the goods are sold as such in the domestic market on payment of VAT subject to conditions specified therein. The importer is required to provide copies of the following documents along with refund claim viz, documents evidencing payment of VAT; invoices of sale of imported goods in respect of which refund is claimed and documents evidencing payment of appropriate sales tax or value added tax.

In this case, the refund claims sanctioned by the original adjudicating authority and on an appeal filed by the Revenue, the impugned order was set aside resulting in demand for the refund amount sanctioned. Central Board of Excise and Customs issued an instruction vide Circular No. 18/2010-Cus., dated 8-7-2010 wherein the Board has stated that there is no need to look into the balance sheet and Profit & Loss A/c to ensure that there was no unjust enrichment. The claimant have to submit the Chartered Accountant's certificate certifying that the burden of SAD (4%) has not been passed on by the importer to customers to fulfill the requirement of unjust enrichment. The ld. Commissioner has reproduced the certificate issued by Chartered Accountant wherein Chartered Accountant has certified that said amount was not recovered directly or indirectly from the customers; No Cenvat credit has been taken and no unjust enrichment has been derived by claiming refund. Thereafter the ld. Commissioner has gone into a detailed examination of accounting principles and the way the amount has been accounted in the records to reach the conclusion that the certificate produced by the appellant is not sufficient to rebut the presumption that the incidence of duty has been passed on. The Circular issued by the Board clearly shows that Chartered Accountant's certificate is sufficient if it explains how the burden has not been passed on. On going through the sample invoices produced before then, it was found that the invoice shows only VAT and not SAD. Further the certificate issued by the Chartered Accountant as discussed above clearly shows that appellants have not collected SAD directly or indirectly. Since the certificate has been produced by the statutory auditor it cannot be said that they were unaware of the records maintained by the appellant. For considering the accounting principles, the ld. Commissioner has explained that the instructions issued by the Board that the certificate of Chartered Accountant can be accepted is applicable only for the current financial year and for the earlier period, he was required to go into accounting method. Tribunal was unable to appreciate this logic. The Board itself says that 4% exemption is operated through a refund mechanism wherein the importer would pay the SAD at first and claim refund after showing the Government that he has paid VAT. Therefore the exemption is available if the importer is able to show that he has paid 4% SAD (CVD) and subsequently the same goods has been sold in the domestic market and sales tax/VAT for which has been paid. The Notification requires only these aspects to be proved by the documents. Further in view of the provisions of Section 11B, the Board has prescribed that the unjust enrichment is required to be examined and for this purpose the Chartered Accountant's certificate should be produced. Going by the documents and the Chartered Accountant certificates in this case, Tribunal finds that in respect of all the refund claims the appellants have fulfilled the required conditions. Tribunal was not impressed by the detailed examination given by the Commissioner about accounting. What is required to be seen is whether there is unjust enrichment or not.

Further, it is also find that as submitted by the ld. Counsel, the very same issue came up before the Tribunal in respect of twelve refund claims of the very same appellant and this Tribunal vide order dated 22-9-2011 allowed the appeal filed by the appellants. Further the ld. Counsel also relied upon the decisions of the Tribunal in the case of ST'P Ltd. v. Commr. of Customs (Import), Mumbai reported in 2011 (267) E.L.T. 110 (Tri.-Mumbai) wherein a similar view was taken. In that case also the Tribunal took the view that the certificate from a Chartered Accountant is sufficient and in that case also the refund claim was related to the year 2007. The issue is already decided by the said two decisions and Tribunal is also convinced on the facts and circumstances of this case that appellant is eligible for refund. By refusing to modify the order issued by this Tribunal and directing the appellant to deposit the amount we will only be creating additional work on payment of amount by the appellant under different challans and sanction of refund subsequently. Since Tribunal have already taken a view that the appellant is eligible for refund, they do not consider it necessary to require any pre-deposit from the appellant and therefore the application for modification is required to be allowed. Since while considering the modification application as discussed above, the whole issue was considered, it would be in the interest of justice to decide the appeals themselves finally rather than posting the matter for another hearing on another day.

Accordingly, the application for modification of stay applications are allowed, pre-deposit is waived and appeals themselves are allowed with consequential relief to the appellants.

Decision:-The appeal is allowed.

Comment:- The crux of this case is that if the claimant submit the Chartered Accountant's certificate certifying that the burden of SAD (4%) has not been passed on by the importer to customers, it is sufficient compliance for claiming refund. Since the certificate has been produced by the statutory auditor it cannot be said that they were unaware of the records maintained by the appellant. Hence, CA certificate is sufficient to prove the requirement of unjust enrichment for claiming SAD refund.

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PJ/Case Laws/2012-13/1520

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