By TIOL News Service

MUMBAI, JULY 08, 2013: THE appellant imported consignments of tyres, flaps and tubes used in the manufacture of motor vehicles on payment of duty. The appellant filed a claim for refund of CV duty of Rs.26,674/- on the ground that the tyres, flaps and tubes used in the manufacture of motor vehicles are eligible for exemption from payment of duty in terms of Notification 6/2000-CE (Sl. 72).

The lower adjudicating authority after granting hearing to the appellant found that the appellant has not produced any documents showing that the incidence of duty has not been passed on to the customers; that as per section 28D of the Customs Act every person who has paid the duty on any goods under this Act shall unless the contrary is proved by him be deemed to have passed on the full incidence of such duty to the buyer of such goods. After recording the above, the lower adjudicating authority, however rejected the claim as unsubstantiated.

The lower appellate authority observed that the certificate issued by the External Auditor is not sufficient in itself unless it is backed by documentary evidence such as sale invoices to show that the price of the goods was not increased and thereby rejected the appeal.

So, the importer is before the CESTAT.

The Bench observed -

"3. We find that the lower adjudicating authority in this case proceeded on the premise that the appellant have not passed on the incidence of duty on the consumer for which he claimed the benefit. We also find that the lower adjudicating authority recorded that the appellant produced a Certificate from the Chartered Account certifying that as per Book of Accounts the duty incidence has not been passed on to any third party and after recording that this certificate has not been supported by any corroborative evidence rejected the refund claim as unsubstantiated. Learned Commissioner (Appeals) also similarly rejected the refund claim. We wish to record here that ground of unjust enrichment cannot be a ground for rejecting a refund claim. The question of unjust enrichment comes into play only after when it is decided whether refund is sanctionable or otherwise. We find that both the lower authorities have not given findings whether the refund is sanctionable or otherwise and straightway rejected the refund claim on the ground of unjust enrichment. It is pertinent that after finding whether the refund is sanctionable or not the authorities have to either refund the amount to the appellant or they have to credit the amount to the Fund. In these circumstances, the case is remanded to the lower adjudicating authority to decide the refund on its merits and thereafter required to decide the question of unjust enrichment."

Holding so, the appeal was allowed by way of remand.

(See 2013-TIOL-1030-CESTAT-MUM)