ITC LTD. Vs. COMMISSIONER OF CUSTOMS, VISAKHAPATNAM

JUDGEMENT

(1.) THESE appeals are filed by the following parties assailing a common order of the Commissioner (Appeals) No. 3 to 23/2007(V - II)(D)CUS dt. 4 -9 -2007, vide which he rejected the claims for refund of the appellants. The particulars of refund claimed by the parties are given below : -

(2.) THE common facts of the appeals are that appellants are exporters of rice and had paid cess of 0.5% ad valorem under Agricultural and Processed Food Products Export Cess Act, 1985 (APFPEC Act) on export of consignments of rice. The impugned exports had taken place in June, 2006. The APFPEC Act was repealed w.e.f. 1 -6 -2006. Under separate orders, the refund claims filed by agents of the exporters for cess paid were sanctioned by the original authority in terms of Section 27 of the Customs Act, 1962 (the Act). The Department challenged the orders of the original authority before the Commissioner (Appeals). It was submitted that the original authority had erred in holding that the principles of unjust enrichment did not apply to the impugned claims. Citing the judgment of the Apex court in the case of Solar Pesticides v. UOI [2000 (116) E.L.T. 401 (S.C.)], it was argued that the principle was attracted in all cases where incidence of duty had been passed on directly or indirectly to another person. As entered in the respective shipping bills, the FOB value realized by the exporter and reflected in the bank realization certificates, the FOB value realized was inclusive of the cess in dispute. The original authority had failed to examine the claims from unjust enrichment angle and had therefore arrived at an incorrect conclusion that the principles of unjust enrichment did not apply to the impugned refund claims. Before the Commissioner (Appeals), the assessee had submitted that there was nothing on record of the Department to show that the FOB value realized by the respective parties included the cess. The APFPEC Act stood repealed at the time the relevant exports were made and the cess was paid. A non -existent levy or tax could not be passed on. The appellants claimed that as per the contracts with their foreign buyers, they were liable to bear export duties, taxes, etc. The invoice price was a composite price and it could be inferred that the duty burden had not been passed on. They raised this argument relying on a number of case laws.

(3.) THE Commissioner (Appeals) found that the cess amount in question was borne by the agents on behalf of the exporters and that the exporters reimbursed the cess amount to the agents and in turn would have recovered the same by including it in the FOB value of the export goods. He found that the decision of the Tribunal in the case of Modipon Fibre Co. v. CCE, Ghaziabad [2004 (173) E.L.T. 168 (Tri. - Del.)] is relevant in deciding the case. In the said decision, the Tribunal had observed that price was determined from cost of production, raw material, taxes and duty and no manufacturer would sell his goods at loss, though he may reduce profit margin to compete in the market in case of enhancement of duty.