Whether Cess paid under Coal Mines (Conservation and Development) Act, 1974 treated at par with Customs Duty and principle of unjust enrichment applicable?

PJ/Case Laws/2012-13/1379

Case:-M/S RAIN CALCINING LTD V/S COMMISSIONER OF CUSTOMS, VISAKHAPATNAM

Citation:- 2013-TIOL-07-CESTAT-BANG

Brief Facts: - The appellants, M/s Rain Calcining Ltd. imported raw petroleum coke and, inter alia, paid cess under Section 7 of the Coal Mines (Conservation and Development) Act, 1974. Subsequently, they filed a refund claim on the ground that no cess was leviable on by-products as the levy was only in respect of the coal which was mined. The original authority while accepting that the appellants were not required to pay the cess, rejected the prayer for payment of refund in cash and deposited the same into the consumer welfare fund. This order of the original authority stands upheld by the impugned order passed by the commissioner (Appeals). Hence, the assessee filed the present appeal.

Appellant’s Contention: - The appellant contended that the cess collected by the Department under the Coal Mines (Conservation and Development) Act, 1974 cannot be treated on par with the Customs duty/Excise duty and the provisions of unjust enrichment cannot be applied. In this regard, he relies on the decision of the Hon'ble High Court of Gujarat in the case of Commissioner Vs. Sahakari Khand Udyog Mandli Ltd. [2011(263) ELT 34 (Guj.)] = (2010-TIOL-887-HC-AHM-CX). He also relies on the decision of the Tribunal in the case of CCE, Jammu Vs. Jindal Drugs Ltd [2011(267) ELT 653 (Tri. Del.)] = (2009-TIOL-2562-CESTAT-DEL). He further submits that they produced the Chartered Accountant's certificate in support of the claim that the burden of cess was not passed on to the consumers.

Respondent’s Contention: -The respondent states that in the present case the cess has been imposed as Customs duty on the imported goods. Merely because the cess is levied under another Act, the same cannot be anything different from Customs duty as the taxable event in the present case is only "import".
He further submits that bar of unjust enrichment applies to cess also as it is also held by the Tribunal in the following cases:-
a) Jindal Solvent Extractions V/s. CCE, Ghaziabad [1999(113) ELT 159 (Tri.)]
b) Sukna Tea & Industries Ltd. V/s. CCE, Bolpur [1999(112) ELT 859 (Tri.)]
c) Amaravathy Sri Venkatesa Paper Mills Ltd. V/s. CCE [2010(261) ELT 1086 (Tri. - Chennai)] = (2010-TIOL-577-CESTAT-MAD).

Reasoning of Judgment: - The Hon’ble Tribunal held that the cess levied under the Coal Mines Act, in the present case, relates to import of coke. The duty has been levied on the taxable event of "import". Merely because the Customs duty was levied under the Coal Mines Act, the same cannot be treated as different from Customs duty. It is not in dispute that the Central Government can levy the Customs duty under the Customs Tariff Act or under any other law enacted by the Parliament. That being the case, the nature of levy has to be determined based on the taxable event. Therefore, what has been levied and collected was Customs duty only. However, in the present case, considering the case on merits, the original authority has sanctioned the refund. The dispute only relates to whether the appellants have proved that the duty burden was passed on by the appellants to the consumers or not.
It was further held that the appellants were only relying on the Chartered Accountant's certificate which was considered by the authorities below and it was held that the certificate did not indicate the basis on which the certification has been made and hence questioning the veracity of the certificate. Undisputedly, the burden to prove that the amount paid as cess (Customs duty) was not passed on to the consumers was on the appellants which they have failed to discharge satisfactorily. Thus, in view of this, they held that they do not find any valid reason to differ with the findings of the authorities below on the issue of unjust enrichment.
The decision of the Hon'ble High Court has been rendered in the facts of the said case and it has been clearly held that no question of law was involved in the said case and, therefore, it cannot be of any help to the appellants. Similarly, the decision of the Tribunal in the cast of Jindal Drugs Ltd. (supra) relates to the issue that the exemption granted under the Central Excise Act is not automatically applicable to levy of Excise Duty under other enactments. This also cannot be of help to the appellants. Thus, the appeal by the appellant is not acceptable.

Decision: - The appeal was rejected.

Comment:-The analogy drawn from this case is that whenever the principle of unjust enrichment is applicable, the burden is on the assessee to effectively prove that the duty has not been passed on to the consumers. In the event of failure to discharge such burden, refund is not admissible.

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PJ/Case Laws/2012-13/1379

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