Principal Commissioner of Customs Vs FESTO Controls Private Limited (Karnataka High Court)
Conclusion: A valid Chartered Accountant certificate was sufficient to discharge the burden of proving that the incidence of 4% SAD was not passed on to customers and discharge the statutory presumption of unjust enrichment.
Held: Assessee-company had imported goods after paying 4% SAD and later applied for a refund. Adjudicating Authority and the first appellate authority rejected the claim, holding that assessee had failed to sufficiently prove that the burden of the duty had not been passed on to its customers, a concept known as ‘unjust enrichment’ under Section 28D of the Customs Act. CESTAT, however, reversed this decision, accepting a certificate from a Chartered Accountant as adequate proof. Revenue argued that the CA certificate was unsatisfactory and that CESTAT had misapplied the law. Assessee contended that the certificate, as prescribed by various CBEC Circulars, was sufficient to rebut the statutory presumption of unjust enrichment. It was held that Section 28D of the Customs Act imposes a rebuttable presumption that the duty burden has been passed on. The court observed that when read in conjunction with CBEC Circulars Nos. 6/2008, 16/2008, and 18/2010, the mechanism to rebut this presumption is the production of a certificate from a Chartered Accountant. The bench followed its own precedent in Commissioner of Customs, Bangalore vs. Apple India Pvt. Ltd., and found that the CESTAT had correctly applied the law. It is clarified that the doctrine of unjust enrichment will apply to 4% CVD refunds Scheme under the said exemption notification issued in terms of Section 25(1) of the Customs Act, 1962. However, importers may produce a certificate from the statutory auditor/Chartered Accountant who certifies the importer’s annual financial accounts under the Companies Act or any statute, explaining how the burden of 4% CVD has not been passed on by the importer and to fulfill the requirement of unjust enrichment. In addition to the aforesaid the importer shall also make a self-declaration along with the refund claim to the effect that he has not passed on the incidence of 4% CVD to any other person.” Tribunal’s order granting refund was upheld. Revenue’s appeal was dismissed, affirming that a valid Chartered Accountant certificate suffices to discharge the burden of proving that the incidence of 4% SAD was not passed on to customers.
