PEARL BEVERAGES LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) The issue raised in the instant appeal relates to applicability of the clause of unjust enrichment in respect of refund of customs duty paid on certain capital goods. There is no dispute relating to the admissibility of refund on merits. The Deputy Commissioner of Customs sanctioned the amount of refund in question. But instead of paying the amount in cash to the appellants, the same was credited to the Consumer Welfare Fund, holding that the appellants failed to discharge the burden case on them to prove that the incidence of the duty under refund was not passed on to another person. The Commissioner (Appeals). before whom the order was challenged also ruled against the appellants holding that the appellants have failed to prove the test of unjust enrichment, which is applicable even in respect of capital goods in terms of the judgment of the Apex Court in case of Solar Pesticide Pvt Ltd., Vs. UOI reported in 2000 (116) ELT 401 SC.

(2.) Heard both sides. The appellants are pleading that the test of unjust enrichment is not applicable to the capital goods as illustrated by the Hon'ble Supreme Court in the Solar Pesticide Pvt. ltd. case (supra). In para 17 of the order the Hon'ble Court had observed as under : - "Para 17 -The use of the words "incidence of such duty " is significant. The words "incidence of such duty" mean the burden of duty. Section 27 (1) of the Act talks of the incidence of duty being passed on and not the duty as such being passed on to another person. To put it differently the expression "incidence of such duty" in relation to its being passed on to another person would take it within its ambit not only the passing of the duty directly to another person but also cases where it is passed on indirectly. This would be a case where the duty paid on raw material is added to the price of the finished goods which are sold in which case the burden or the incidence of the duty on the raw material would stand passed on to the purchaser of the finished product. It would follow from the above that when the whole or part of the duty which is incurred on the import of the raw material is passed on to another person then an application for refund of such duty would not be allowed under Section 27 (1) of the Act.

(3.) Admittedly in this case there is no sale of capital goods. These have been used as fitment to the already installed capital goods and only raise the cost of capital goods and not what the appellants make by using the capital goods and sell to their customers. No. evidence of velue enhancement of finished goods manufactureral by the appellants is advanced.