Whether CA Certificate that burden of SAD was not passed on to buyer was sufficient for proving that unjust enrichment was not applicable?

PJ/Case Law/2013-14/1686

Case:-INTERPLEX INDIA PVT. LTD. VSCOMMISSIONER OF CUSTOMS, AHMEDABAD

Citation:-2013 (290) E.L.T. 386 (Tri. - Ahmd.)

Brief facts:- The issue involved in this case is regarding refund of the 4% of the amount paid as special additional duty by the appellant. The appellant has imported the goods and paid the SAD and filed refund of an amount of Rs. 1,11,347/-. The said refund claim was sought to be rejected by issuing of show cause notice. The adjudicating authority, after following the due process of law, came to the conclusion that the appellant had justified the refund claim and coming to such conclusion, he allowed the refund claim filed by the assessee. Departmental authorities, aggrieved by such an order, preferred an appeal before first appellate authority. Before the first appellate authority, the appellant herein also filed the cross-objection. The first appellate authority, after considering the submissions made before him, reversed the Order-in-Original which granted the refund to appellant. Hence, the assessee is in appeal to the Tribunal.

Appellant’s contention:- Ld. Counsel appearing on behalf of the appellant drew attention to the findings of the adjudicating authority and also the findings of first appellate authority and Chartered Accountant’s certificate. He relied upon the decision of this Bench in the case of Gujarat Boron Derivatives Pvt. Ltd. - 2012 (280)E.L.T.94 (Tri.-Ahmd.), as also the decision of Coordinate Bench in the case of STP Ltd. - 2011 (267)E.L.T.110 (Tri.-Mumbai). He also quoted about the C.B.E. & C. Circular No. 18/2010-Cus., dated 8-7-2010.

Respondent’s contention:- Ld. Additional Commissioner (A.R.), submitted that the refund amount was shown as expenses in the profit and loss account and subsequently revised returns were filed showing the said amount as receivable.

Reasoning of judgment:-On perusal of the records, It was found that there is no dispute that the appellant is eligible to claim the refund of an amount of Rs. 1,11,357/- paid by him on the goods which were imported. According to The honorable bench the entire case can be decided on the basis of certificate issued by the Chartered Accountant. The extracts from the same reads as follows:-

M/s. Interplex India Pvt. Ltd., have co-related the payments of ST/VAT on the imported goods (in respect of which refund is claimed) with the invoices of sale, as is required along with the original tax/duty payment documents as proof of payment of appropriate ST/VAT for the purpose of Paras 2(d) and (e) of the Notification No. 102/2007, dated 14-9-2007 and we have verified the same and we hereby certify that:-

With regard to the imports under Bill of Entry No. 652616, dated 2-2-2008 and 654954 dated 19-3-2008 and Challan No. 99041433 dated 4-2-2008 and 99043453, dated 19-3-2008 wherein the Special Additional Duty has been paid and we are informed that the refund under Notification No. 102/2007 dated 14-9-2007 as amended, is sought by M/s. Interplex India Pvt. Ltd.

As required for examination of the principle of unjust enrichment, in the case before sanction of refund under Notification No. 102/2007, dated 14-9-2007, this is certified that the burden of 4% CVD/SAD has not been passed on by the importer M/s. Interplex India Pvt. Ltd. to the buyer and that they fulfill the requirement of unjust enrichment.

After examination of the records, it is verified from the records that the details as given in the Declaration/Declaration of Calculations/Summary of Sale invoices are true details thereof.

That the Special Additional Duty (SAD) of Customs of Rs. 1,11,357/- paid against Bills of Entry as detailed as Annexure A to this certificate has been shown as ”SAD receivable” in the books of account of M/s. Interplex India Pvt. Ltd. as on the date. As the said amount of SAD has been shown as “recoverable” in the books of account and not charged as expenses in Profit & Loss account, the incidence of Special Additional Duty has not been passed on to the customer but the same has been borne by the company. Therefore, there would not be “unjust enrichment” in the case the said amount of SAD is refunded to M/s. Interplex India Pvt. Ltd.

It can be seen from the above reproduced Chartered Accountant’s certificate that the said certificate is specific to the Bill of Entry and also indicate that the Chartered Accountant is a statutory auditor of appellant. As against such a specific certificate, it is seen that ld. Commissioner (Appeals) has analyzed the balance sheet and come to a conclusion that an amount of Rs. 1,11,357/- has been debited in expenses accounts in the financial year 2007-2008. It is not very clear as to how first appellate authority has come to such a conclusion. Be that as it may, Tribunal finds that in C.B.E. & C. Circular No. 18/2010-Cus., dated 8-7-2010 at Para 6 has specifically directed field formation in respect of refund claim arising on SAD paid by the assessee, which is reproduced below.

Some field formations have also raised certain doubts whether the audited Balance Sheet and Profit and Loss Account have to be examined in respect of the current financial year for scrutiny of unjust enrichment aspect. It is stated that a large number of refund claims relating to the current year were held up for want of such verification. In this regard, the issue has been examined by the Board and it has been decided that the field formations shall accept a certificate from Chartered Accountant for the purpose of satisfying the condition that the burden of 4% CVD has not been passed on by the importer to any other person. Further, the importer shall also make a self-declaration along with the refund claim to the effect that he has not passed on the incidence of 4% CVD to any other person. Hence, there is no need for insisting on production of audited Balance Sheet and Profit and Loss Account in these cases. It may also be noted that recently the Board has also notified the list of documents required to be filed by the applicant along with the refund claim, (Annexure-II) which is also displayed in the departmental website. Hence, other than these aforesaid documents, no other document would be required in the normal course of granting 4% CVD refund.

This paragraph specifically talks about acceptance of certificate of Chartered Accountant who is a statutory auditor of the assessee. The appellant herein has satisfied all the conditions required for claiming refund of Special Additional Duty paid by him.

It was agreed with the Bench of the Tribunal in the case of Gujarat Boron Derivatives Pvt. Ltd. (supra) and the Coordinate Bench in the case of STP Ltd. (supra), these two decisions are applicable in this case and are in favour of the assessee. Accordingly, the impugned order is incorrect and is to be set aside.

Decision:-Appeal allowed.
Comment:-The substance of this case is that when in terms of the Board Circular, it is clear that production of certificate from Chartered Accountant, which is also a statutory auditor, is sufficient for proving the claim of unjust enrichment, then calling of financial statements and analysing them is not warranted by the adjudicating officers sanctioning the refund claim.

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PJ/Case Law/2013-14/1686

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