Case Law Details
Commissioner of Customs Vs Graphite India Limited (CESTAT Kolkata)
CESTAT Kolkata held that question of unjust enrichment in terms of section 27(2) of the Customs Act doesn’t not arise as imported goods are used as raw material for manufacture of final product i.e. imported goods are not sold to someone else.
Facts- The respondent is a manufacturer of Graphite Electrodes. They imported some material/goods from the suppliers of Japan. The respondent is eligible for exemption in duty payment against the materials. They import from Japan upon presentation of Country of Origin Certificate to the Customs Authorities by virtue of Customs Tariff (Determination of Origin of Goods under the Comprehensive Economic Partnership Agreement between the Republic of India and Japan) Rules, 2011, implemented by Notification No.55/2011-Cus (NT) dated 01.08.2011.
The respondent filed 27 Bills of Entry for the clearance of the said goods and paid the Basic Customs Duty at the rate applicable and the goods were allowed to be cleared for home consumption.
Initially, the said refund claims were entertained by the Adjudicating Authority, who rejected refund claims based on the judgment of the Hon’ble Apex Court in the case of ITC Limited Vs, Commissioner of Central Excise, Kolkata IV holding that without challenge/modifying the assessment of Bills of Entry, the refund is not entertainable. In remand proceedings, the adjudicating authority again rejected the refund claims on the ground of unjust enrichment.
Commissioner (A) allowed the refund claims and in this case, the refund claim was filed from the strength of the Certificate of Country of Origin issued retroactively. Therefore, the Bills of Entry are to be amended u/s. 149 of the Customs Act, 1962. The Customs authorities again remanded back the matter to the adjudicating authority for denovo adjudication for reconsider of refund claims.
Conclusion- Held that the decision of ITC Limited is not applicable to the present facts and circumstances of the case as at the time of filing of Bills of Entry, the appellant was not entitled to claim the refund claim of excess duty paid by them. Later on, when the respondent was able to get Certificate of Country of Origin, they filed refund claim in terms of Notification No.55/2011-Cus (NT) dated 01.08.2011, which permits the respondent to file the refund claim within 12 months from the date of filing of the Bills of Entry.
Held that the respondent being a manufacturer and using the imported goods to manufacture the final product, which is exported, in that circumstances, the question of bar of unjust enrichment does not arise. Therefore, the respondent has passed the bar of unjust enrichment in the facts and circumstances of the case.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The Revenue has filed the present appeal against the impugned order and the Respondent has also filed the Cross Objection.
2. The facts of the case are that the respondent is a manufacturer of Graphite Electrodes. During the ordinary course of business, the respondent imported some material/goods from the suppliers of Japan. The respondent is eligible for exemption in duty payment against the materials. They import from Japan upon presentation of Country of Origin Certificate to the Customs Authorities by virtue of Customs Tariff (Determination of Origin of Goods under the Comprehensive Economic Partnership Agreement between the Republic of India and Japan) Rules, 2011, implemented by Notification No. 55/2011-Cus (NT) dated 01.08.2011.
2.1 The respondent filed 27 Bills of Entry during the period 14.05.2018 to 27.05.2019 for the clearance of the said goods. The respondent paid the Basic Customs Duty at the rate applicable and the goods were allowed to be cleared for home consumption. Thereafter, the respondent filed 3 refund claims dated 10.05.2019, 21.11.2019 & 23.05.2020. The Country of Origin Certificate has been issued retroactively in terms of the Notification No.55/2011-Cus (NT) dated 01.08.2011.
2.2 Initially, the said refund claims were entertained by the Adjudicating Authority, who held that the bar of unjust enrichment is not applicable to the facts of this case. The Certificate of Country of Origin is found in order, but rejected the refund claims on the basis of the judgment of the Hon’ble Apex Court in the case of ITC Limited Vs, Commissioner of Central Excise, Kolkata IV reported in 2019 (360) ELT 216 (S.C.) holding that without challenge/modifying the assessment of Bills of Entry, the refund is not entertainable. The said order was challenged by the respondent before the ld.Commissioner (Appeals), who remanded back the matter to the adjudicating authority for reconsideration of refund claims on the strength of Certificate of Country of Origin issued retroactively since the overseas suppliers from Japan were not able to provide the Certificate of Country of Origin at the time of presenting the Bills of Entry.
2.3 In remand proceedings, the adjudicating authority again rejected the refund claims on the ground of unjust enrichment.
2.4 The respondent again challenged with the order before the ld.Commissioner (Appeals), who held that in view of the case of ITC Limited (supra), the adjudicating authority should have allowed the refund claims and in this case, the refund claim was filed from the strength of the Certificate of Country of Origin issued retroactively. Therefore, the Bills of Entry are to be amended under Section 149 of the Customs Act, 1962. The Customs authorities again remanded back the matter to the adjudicating authority for denovo adjudication for reconsider of refund claims.
2.5 Against the said order, both sides are in appeal.
3. The Revenue filed this appeal before this Tribunal and the respondent filed Cross Objection of the appeal filed by the Revenue praying that the refund be sanctioned along with interest.
4. The ld. A.R. for the Revenue, submits that the ld.Commissioner (Appeals) has not considered the issue of bar of unjust enrichment and he remanded back the matter to the adjudicating authority for reconsideration of refund claim filed by the respondent. Therefore, the impugned order is to be set aside.
5. On the other hand, the ld.Counsel for the respondent, submits that the respondent has filed the refund claims in terms of Notification No.55/2011-Cus (NT) dated 01.08.20 11 and at the time of filing of Bills of Entry, the respondent was not having Certificate of Country Origin. Therefore, the question of amendment of Bills of Entry does not arise.
5.1 He further submitted that in the earlier round of adjudication, the adjudicating authority held that the bar of unjust enrichment is not applicable to the facts of this case and the said order has not been challenged by the Revenue. In that circumstances, at this stage, the issue of unjust enrichment cannot be raised.
5.2 He further submitted that the decision of ITC Limited (supra) is not applicable to the present facts and circumstances of the case.
6. Heard both sides and considered the submissions.
7. One the basis of arguments advanced by both sides, the following issues are decided by this Tribunal :
(a) Whether in the facts and circumstances of the case, the decision of ITC Limited Vs, Commissioner of Central Excise, Kolkata IV reported in 2019 (360) ELT 216 (S.C.) is applicable or not ?
(b) Whether the bar of unjust enrichment is applicable to the facts and circumstances or not ?
Issue
(a) Whether in the facts and circumstances of the case, the decision of ITC Limited Vs, Commissioner of Central Excise, Kolkata IV reported in 2019 (360) ELT 216 (S.C.) is applicable or not ?
8. We find that the facts, which are not in dispute, are that the respondent filed 27 Bills of Entry for import of the goods from the country of Japan. At the time of assessment of Bills of Entry, the respondent paid the duty and got cleared the goods for home consumption. Thereafter, in terms of Customs Tariff (Determination of Origin of Goods under the Comprehensive Economic Partnership Agreement between the Republic of India and Japan) Rules, 2011, the respondent could able to obtain the Certificate of Country of Origin retroactively in force in terms of Notification No.55/2011-Cus (NT) dated 01.08.2011 and filed refund claims in terms of the said Notification. The contents of the relevant portion of the Notification are extracted herein below :
“2. Application –
An application for a certificate of origin should be made by the exporter or its authorized agent, to the competent governmental authority of the exporting Party or its designees, together with appropriate supporting documents proving that the goods to be exported qualifies as an originating goods of the exporting Party :
Provided that the exporter’s or its authorized agent’s signature may be autographed or electronically printed.
3. Insurance:-
(a) a certificate ate of origin should be issued not later than three days from the date of shipment.
(b) in exceptional cases where the certificate of origin has not been issued before the time limit provided for in clause (a) at the request of the exporter or its authorized agent, the certificate of origin may be issued retroactively in accordance with the laws and regulations of the exporting Party within [twelve months] from the date of shipment, in which case it is necessary to indicate ÏSSUED RETROACTIVELY “in Box 8 of the certificate of origin specified in Appendix-B to Annexure-2:
(c) where an importer of an originating goods at the time of importation does not have in his possession a certificate of origin, the importer may, in accordance with the laws and regulations of the importing Party, apply for a refund of any excess customs duties paid or deposit imposed as a result of the goods not having been granted preferential tariff treatment, on presentation to the customs authority of the importing Party the certificate of origin issued in accordance with paragraph 3 of Annexure 2 and, if required, such other documentation relating to the importation of the good.
(d) Signatures on a certificate of origin of the representative es of the complement governmental authority of porting Party or its designees may be autographed or electronically printed.
(e) Every certificate of origin should hear a certification number given by the competent government authority of the exporting party or its designees and the same certification num ber shall not be used again in issuing another certificate of origin.
(f) in the event of theft, loss or destruction of the original certificate of origin before the expiration of its validity, the exporter or its authorized agent may request the competent governmental authority of the exporting Party or its designees to issue a new certificate of origin with a new certification number on the basis of the export documents in their possession, in which case the original certificate of origin should be invalidated :
Provided that the new certificate should bear in Box 8 of Appendix B to Annexure 2 the words “CERTIFIED TRUE COPY” :
Provided further that the date of issuance and the certification number of the original certificate of origin should be indicated in the new certificate of origin.
Provided that the new certificate of origin shall be valid during the original term of the validity of the original certificate of origin.”
As per the said Implementing Procedures, where the Certificate of Origin has issued for the time limit in Clause 3(a) above, the Certificate of Origin should be issued at the request of the exporter or its authorized agent, the Certificate of Origin may be issued retroactively in accordance with the laws and regulations of the exporting Party within twelve months from the date of shipment, in which case, it is necessary to indicate “issued retroactively”. Further, where an importer of an originating goods at the time of importation does not have in his possession a certificate of origin, the importer may, in accordance with the laws and regulations of the importing Party, apply for a refund of any excess Customs duties paid or deposit imposed as a result of the goods not having been granted preferential tariff treatment, on presentation to the customs authority of the importing Party the certificate of origin issued.
9. Admittedly, in the case in hand, the respondent was not having Certificate of Country of Origin at the time of filing of Bills of Entry and paid Customs duty. Accordingly, the goods were cleared for home consumption, but later on, the respondent was able to produce the Certificate of Country of Origin in terms of Customs Tariff (Determination of Origin of Goods under the Comprehensive Economic Partnership Agreement between the Republic of India and Japan) Rules, 2011 and filed refund claim in terms of Notification No.55/2011-Cus (NT) dated 01.08.2011, which provides that the respondent is entitled for preferential tariff treatment and is entitled to file refund claims within twelve months from the date of filing of Bills of Entry.
10. In this case, it is a fact that the respondent has filed the refund claim on production of Certificate of Country of Origin within twelve months of filing of Bills of Entry and claimed refund of excess duty paid in terms of Notification No.55/2011-Cus (NT) dated 01.08.2011.
11. In that circumstances, we hold that the decision of ITC Limited (supra) is not applicable to the present facts and circumstances of the case as at the time of filing of Bills of Entry, the appellant was not entitled to claim the refund claim of excess duty paid by them. Later on, when the respondent was able to get Certificate of Country of Origin, they filed refund claim in terms of Notification No.55/2011-Cus (NT) dated 01.08.2011, which permits the respondent to file the refund claim within 12 months from the date of filing of the Bills of Entry.
12. Therefore, the rejection of refund claim initially by applying the decision of ITC case (supra) is not sustainable to the facts and circumstances of the case.
13. In that circumstances, the refund claims filed by the respondents are allowed.
Issue
(b) Whether the bar of unjust enrichment is applicable to the facts and circumstances or not ?
14. Now, in this case, the Revenue has raised another ground that the Appellant Revenue has failed to pass bar of unjust enrichment. We find that at the time of entertaining refund claim, the adjudicating authority initially observed as under :
15. At the initial stage, the ld.Adjudicating Authority has recorded his findings, which are as under :
“9. Regarding Unjust Enrichment in terms of Section 27 (2) of the Customs Act, 1962, the importer has submitted a declaration mentioning that “we hereby declare that we are the manufacturer importer and we use the imported goods to manufacture our final product Graphite Electrode, which we export all over the world. Hence the question of the amount of duty in relation to which such refund is claimed was paid by us and the incidence of such duty has not been passed on by us to any other person.
It appears that the above said declaration of the importer appears to be true since petroleum coke and pitch coke are the basic raw materials for manufacturing of graphite Electrode. It is also observed that M/s. Graphite India Limited is the leading manufacturer of graphite Electrode in India and regularly exporting their final product i.e. Graphite Electrode to all over the world through ICD Durgapur. Again, the duty in relation to which such refund is claimed was paid by them and the incidence of such duty has not been passed on by them to any other person appears to be true since they, themselves use the imported goods as their raw material for manufacturing their final product and they do not sell the same to someone else. Hence, the question of unjust Enrichment in terms of Section 27(2) of the Customs Act, 1962 may not be arisen in this instant case.”
16. The said findings of the Adjudicating Authority never challenged by the Revenue in appeal, hence, attained finality.
17. In that circumstances, we hold that the said finding of the adjudicating authority is final.
18. Moreover, we also find that that the respondent being a manufacturer and using the imported goods to manufacture the final product, which is exported, in that circumstances, the question of bar of unjust enrichment does not arise.
19. Therefore, we hold that the respondent has passed the bar of unjust enrichment in the facts and circumstances of the case.
20. In view of this, we hold that the respondent is entitled for refund as prayed. The adjudicating authority is directed to do the needful in accordance with law within 60 days from the date of receipt of this
21. In these terms, the appeal filed by the Revenue is dismissed and the Cross Objection is allowed with consequential relief, if any.
(Pronounced in the open court on.06.12.2023…)
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