FLOVEL TACKE (P) LTD Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THIS appeal arises from the Order -in -Appeal passed by the Commissioner of Customs (Appeals), Mumbai. In the impugned order, the Commissioner (Appeals) held as under : "The issue here is the amount of Customs duty paid as excess duty on the goods imported by the appellant, subsequently, supplied to M/s. Apar Limited. At the time of import an excess duty of Rs. 63,40,757/ - was paid by the appellant which was actually not chargeable under notification of 64/94 - Cus. dated 1 -3 -1994. Accordingly the Commissioner (Appeals) vide Order -in -Appeal No. 486/97 MCH dated 17 -6 -1997 ordered consequential relief to the appellant. It is observed that the appellant has filed a suit against the M/s. Apar Limited. I also find that there are series of litigations between the appellant and M/s. Apar Limited for recovery of Custom duty paid by the appellant and that finally the matter is pending before Hon'ble High Court, Mumbai. The appellant has in above mentioned suit prayed before Hon'ble High Court that the defendant be ordered to pay the sum of Rs. 63,40,757/ - the additional Custom duty paid by the appellant. I observe from the affidavit filed by the appellant that they have represented that as per contract they are not liable to pay the amount. In view of this, in my opinion, the process on of incidence of duty has been initiated by the appellant by raising a demand on M/s. Apar Limited. The dispute has arisen as to whether the amount is payable by the end buyer i.e., M/s. Apar Limited or not as per the terms of purchase order number 04/WF/NAV/94 dated 29 -11 -1994. As the matter is subjudice and pending before Hon'ble Mumbai High Court for order, I dismiss the appeal for being pre -mature as the issue is pending before the Court."

(2.) LD . Counsel for the appellants, Shri V. Lakshmikumaran has argued that the appellants are engaged in the supply, manufacture, installation, commissioning, testing and civil construction of Wind Operated Electricity Generators (WOEGs). The WOEGs are used as a source of non -conventional energy. Appellants undertook to supply and erect four numbers of WOEGs to M/s. Apar Limited by letter dated 29 -11 -1994. For effectuating the contract, appellants imported certain parts of WOEGs from Germany. Appellants claimed the benefit of concessional rate of duty in terms of Notification No. 64/94 -Cus., dated 1 -3 -1994 which permitted concessional rate of customs duty on various parts of WOEGs and the effective rate of duty on those parts was 'Nil'. According to the appellants out of the 10 parts imported by them, 8 were covered by the Exemption notification. At the time of import, according to the appellants, due to shortage of time for meeting deadline fixed with M/s. Apar Ltd., they had to clear the imported consignment after discharging 25% ad valorem duty. Appellants thereafter claimed refund by letter dated 6 -7 -1995 for Rs. 63,40,757/ -. They also submitted a certificate from the Chartered Accountant stating that the sale of WOEGs to M/s. Apar Ltd. was on the basis of firm prices and no upward variation was payable as per the terms of the order placed by M/s. Apar Ltd. and that the liability of excess duty paid has not been passed on to M/s. Apar Ltd. The refund claim was however rejected by the Asst. Commissioner by order dated 19 -2 -1996 holding that the benefit of Notification No. 64/94 was not available to the appellants. The Asst. Commissioner found that the appellants had imported complete components for assembling of WOEGs in unassembled condition. It was held that the components give the characteristics of a complete machine having the essential character of a complete machine classifiable under Heading 8502.30 and therefore the goods were not eligible for the benefit of serial No. 3 of the Table to Notification No. 64/94. When the matter was taken up in appeal before the Commissioner (Appeals), the Commissioner (Appeals) set aside the impugned order of the Asst. Commissioner with consequential benefits to the appellants holding that Notification. No. 64/94 would apply to the items under dispute. Thereafter appellants approached the Asst. Commissioner for refund of the amount by letter dated 22 -9 -1997. In reply the Asst. Commissioner asked for filing further documents to substantiate appellant's claim that no duty incidence has been passed on by them to the customer. In their further submission before the Asst. Commissioner, appellants mentioned that M/s. Apar Ltd. had categorically denied any liability towards the excess amount of duty of customs paid by the appellants. Appellants also mentioned that they had filed a suit, which was pending before the Bombay High Court, inter alia, claiming that an amount of Rs. 63,40,757/ - was due from M/s. Apar Ltd. M/s. Apar Ltd. had however in their affidavit before the Bombay High Court denied their liability to pay this amount. The Asst. Commissioner by order dated 22 -1 -1999 rejected the refund claim on the ground that the same was premature as the issue of passing of incidence of extra duty was pending before the High Court. In appeal, the Commissioner (Appeals) rejected appellant's claim for refund on the same ground.

(3.) LD . Counsel has argued that the Commissioner (Appeals) had by his order dated 17 -6 -1997 clearly conceded that the impugned goods are covered by the Exemption Notification No. 64/94. There was therefore no scope for any doubt about the basis of the appellant's refund claim for the said amount. The Asst. Commissioner's order rejecting the grant of amount of refund was made while considering the documents filed by the appellants showing that the incidence of duty had not been passed on to M/s. Apar Ltd. and for the reason that the appellant has filed a suit against M/s. Apar Ltd. for payment of the said amount. In terms of the contract for supply of the goods to M/s. Apar Ltd., the clause relating to price clearly stated that the "price was firm and no upward variation what -so -ever shall be permissible". It was also mentioned in the agreement that the prices are exclusive of excise duty and sales tax which are not applicable as on the date of entering into the contract. Ld. Counsel has argued that the Asst. Commissioner has wrongly interpreted the intention of the appellants in filing the suit against M/s. Apar Ltd. which was pending before the Bombay High Court. The appellant's suit was only for claiming disbursement of duty amount suffered on the imported goods. The reply filed by M/s. Apar Ltd. before the Hon'ble High Court would clearly show that appellants had not received any payment towards customs duty and the price was firm. The claim for reimbursement of the amount of duty paid by the appellants from M/s. Apar Ltd. cannot be made the basis for denying the refund since, under Section 28D of the Customs Act, the appellants had shown that the incidence of duty had not been passed on to the customer.