PARADEEP PHOSPHATE LIMITED Vs. COMMISSIONER OF CUSTOMS, KOLKATA

JUDGEMENT

(1.) HEARD both sides. The lower authorities have sanctioned the refund of excess duty amounting to Rs. 2,12,32,689/ - but have credited the same to the Consumer Welfare Fund. Shri S.K. Bagaria, learned Sr. Advocate appearing for the appellants argues that : - (i) The claimed refund has arisen out of finalization of provisional assessment of duty and hence the same is admissible under Section 18(2)(a) of the Customs Act, 1962 without applying the provisions of Section 27(2) of the said Act. He cites the decision of the Apex Court in the case of Commissioner of Central Excise, Mumbai -II v. Allied Photographics India Limited - 2004 (166) E.L.T. 3 (S.C.) to argue that the said decision given in the context of Excise refund fully applicable to a case of Customs refund as the language under both the statutes are pari materia with each other. (ii) Even if the principle of unjust enrichment is held to be applicable to the present case, the appellants are still eligible for the refund since they have not passed on the excess duty burden. He clarifies with the help of cost calculations duly certified by the Chartered Accountant that the selling price fixed for the fertilizer manufactured and sold by the appellants using the impugned imported materials plus the subsidy received by the appellants representing the difference between the retention price less the selling price was much less than the cost of production of the fertilizer calculated taking into account the lower duty of 12 per cent on the imported material. Therefore, it is his contention that the appellants have not passed on the extra duty burden of 3 per cent in the form of higher price nor have they received any subsidy from the Govt. against the same.

(2.) SHRI N.K. Mishra, learned JDR appearing for the Department states that the provision under Section 27(3) of the Customs Act, 1962 categorically states that notwithstanding any other provisions of the Customs Act, the provisions of Section 27(2) applies to all refunds including refunds under Section 18 on finalization of provisional assessment. He also states that under Section 28D of the Customs Act, 1962 there is a presumption regarding passing on of the duty burden. He also reiterates the conclusion of the lower authorities that the higher duty incidence has been compensated by Government subsidy to the appellants.

(3.) CONSIDERING the arguments from both sides and perusal of case records and the cited case law, we are of the view that subject to verification of the cost calculation, the appellants have made out a clear case that they have not passed on the duty burden to the buyers nor have they received a subsidy to compensate for the extra duty burden of 3 per cent since the selling price plus the subsidy received from the Govt. was much less than the cost of production even at the lower rate of duty. As such, we do not find it necessary to go into the question of applicability of unjust enrichment principle to customs refund granted as a result of finalization of provisional assessment under Section 18 of the Customs Act, 1962.