Commissioner of Customs (Exports) Vs LG Electronics India Pvt. Ltd. (CESTAT Chennai)
As regards the issue of unjust enrichment, CESTAT find that the appeal has stated that the procedure to be adopted for refund of 4% additional duty of customs is given in Board Circular No. 6/2008- Customs (F. No. 401/104/2007-Cus.III) dated 28.4.2008 and Customs Public Notice No. 39/2011 dated 14.6.2011.
As per para 6.2 of the said Board‘s circular, Statutory Auditors / Chartered Accountants are required to explain how the burden of 4% CVD has not been passed on by the importer and to fulfill the requirements of unjust enrichment. We find that the certificate of the Chartered Accountant submitted in this case does mention that the aforesaid claim of Rs.43,98,399 is out of Additional Duty of Customs and has been recorded in the books of accounts as ‘Claims Recoverable’ from Customs Department. There is nothing in the appeal to show that 100% verification of invoices was not done by the Chartered Accountant before submission of the claim. In fact, the original authority has recorded his satisfaction on unjust enrichment at para 9 and 10 of his order dated 25.7.2011. We must admit to having been handicapped at this stage, for the appeal book filed by Revenue apart from not containing copies of representative invoices and the concerned Bills of Entry as noted above, does not contain a copy of the Chartered Accountants Certificate that is in dispute nor the exemption notification or the Board’s circular or the Custom House, Public Notice relied upon by them, which are critical documents in this appeal. Copy of the said documents were produced during the hearing by the respondent. Further we find the allegations in the appeal to be general in nature and does not pinpoint any specific para of the Notification / Circular / Public Notice which has been violated or not adhered to so that the same could be examined in detail. Merely stating that ‘the review order was issued on grounds that the certificate is not emphatic to the effect that unjust enrichment is not applicable and the incidence of duty was not passed on to the ultimate customer’, will not suffice, a more focused approach is required.
CESTAT find that the Boards Circular only requires the statutory auditor/Chartered Accountant who certifies the importer’s annual financial accounts under the Companies Act or any statute, to explain how the burden of 4% CVD has not been passed on by the importer and to fulfill the requirement of unjust enrichment. This is, as stated by the respondent, satisfied by the Chartered Accountant’s certificate.
We do not find grounds in the appeal strong enough to prima facie differ from the views of the respondent.
FULL TEXT OF THE CESTAT CHENNAI ORDER
This is an appeal filed by Department against Order in Appeal No.
2. The facts of the case are that M/s. LG Electronics India Pvt. Ltd. filed a refund claim for the whole of the additional duty of customs paid at the time of import of electronic goods which were subsequently sold in the domestic market with proper sales invoice. On verification of the refund application, it was observed that the goods were declared as “LG Brand Super Multi DVD Re-Writer, LG Brand DVD-Writer Drive etc”, whereas the description of goods in the Bill of Entries were “LG Brand DVD Writer Drive and LG Brand DVD ROM Drive”. Further, though the importer had submitted a Chartered Accountant’s certificate, the same was allegedly not in accordance with the Board’s Circular as there was no emphatic declaration to the effect that unjust enrichment was not applicable and that the duty was not passed onto the ultimate customers. The proper officer examined the matter, found the claim to be in order and sanctioned an amount of Rs 43,98,398/- as refund of 4% SAD amount to the appellant. Aggrieved by the sanction of refund, Department filed an appeal against the said order before the Commissioner (Appeals). The learned Commissioner (Appeals) after following relevant procedures, upheld the order of the lower authority. Aggrieved by the said order, Revenue is before us in appeal.
3. We have heard Shri S. Balakumar, learned AR for Revenue. He stated that the lower authority failed to note that the goods imported by M/s Sri LG Electronics vide Bill of Entries were “LG Brand DVD Writer Drive and LG Brand DVD ROM Drive”, whereas the goods sold through sales invoices were described as “LG Brand Super Multi DVD Re-Writer, LG Brand DVD-Writer Drive etc”. Hence the refund was not claimed on the goods that were imported. Further as per Board’s circular 6/2008, while sanctioning refund the principle of unjust enrichment needs to be examined in each case. Considering the voluminous transactions and the documents involved in the cycle, from import to sale, it was felt that it would be expedient to allow the importer to submit a certificate from the statutory auditor / Chartered Accountant who certifies the annual accounts of the importer, that the burden of 4% CVD has not been passed on by the importer to the buyer and to fulfill the requirement of unjust enrichment and the Chartered Accountant should explain how the burden of 4% CVD has not been passed on by the importer. The learned AR referred to Board Circular F No 6/2008 – Customs dated 28/04/2008 and the Customs Public Notice No 14/06/2011 of Chennai Custom House dated 14.6.2011 relied upon in the appeal. He stated that the Public Notice required the Chartered Accountant to do 100% verification of invoices before submission of the refund claims. He went on to state that the certificate submitted in this case did not satisfy the same. He stated that the certificate was vague and hence prayed that the Order in Appeal be set aside.
4. We have heard Shri Rohan Muralidharan, learned counsel for the respondent. He stated that there were only minor discrepancies in the description of the goods since the description in the Bill of Entry was a general one and those in the invoice were more specific. This matter has been examined and dealt with in the impugned order by the Commissioner (Appeals) stating that the department should have produced documentary evidence in the form of sample sales invoice and Bills of Entry copies in case they had wanted to contest the description. He further stated that as noted by the proper officer the sale invoices were certified by the Chartered Accountant while being submitted to the department. The Chartered Accountant has also mentioned in his certificate that the goods imported and additional duty of customs paid against the Bill of Entry, referred to in the annexure ‘A’ to the certificate was sold by the company. As regards the alleged discrepancy and vagueness in the Chartered Accountant’s certificate, he drew attention to para 2 of the said certificate dated 22.3.2011, submitted during the hearing, wherein it is stated as under: –
“2. The aforesaid claim of Rs.43,98,399 is out of Additional Duty of Customs aggregating to Rs.44,92,432 paid on goods imported against the bill of entries during the period May, 2010 as referred to in ‘Annexure A’and sold by the Company, during the period May 19, 2010 to November 20, 2010 which has been recorded in the books of accounts as ‘Claims Recoverable from Customs Department. ”
5. He said that the said certificate is very clear that the claim of refund of Rs.43,98,399/- is out of the additional duty of customs paid on goods imported against the Bill of Entries and sold by the company and has been recorded in the books of accounts as ‘claims recoverable’ from the Customs Department. This being so, it was clear that the said additional duty had not been passed on to the buyers and was retained by them as shown in their books of accounts. He hence requested that the appeal may be rejected.
6. We find that M/s. LG Electronics India P. Ltd. has imported goods claiming exemption under Notification No.102/2007-Cus. dated 14.9.2007. As noted by the Commissioner (Appeals), Revenue has not produced any documentary evidence at any stage of the appeals to show that discrepancy exists between the description of goods imported and those sold. We hence agree with the Commissioner (Appeals) that Revenue has not provided evidence to establish the fact as alleged by them and their appeal in this regard fails.
7. As regards the issue of unjust enrichment, we find that the appeal has stated that the procedure to be adopted for refund of 4% additional duty of customs is given in Board Circular No. 6/2008- Customs (F. No. 401/104/2007-Cus.III) dated 28.4.2008 and Customs Public Notice No. 39/2011 dated 14.6.2011.
8. As per para 6.2 of the said Board‘s circular, Statutory Auditors / Chartered Accountants are required to explain how the burden of 4% CVD has not been passed on by the importer and to fulfill the requirements of unjust enrichment. We find that the certificate of the Chartered Accountant submitted in this case does mention that the aforesaid claim of Rs.43,98,399 is out of Additional Duty of Customs and has been recorded in the books of accounts as ‘Claims Recoverable’ from Customs Department. There is nothing in the appeal to show that 100% verification of invoices was not done by the Chartered Accountant before submission of the claim. In fact, the original authority has recorded his satisfaction on unjust enrichment at para 9 and 10 of his order dated 25.7.2011. We must admit to having been handicapped at this stage, for the appeal book filed by Revenue apart from not containing copies of representative invoices and the concerned Bills of Entry as noted above, does not contain a copy of the Chartered Accountants Certificate that is in dispute nor the exemption notification or the Board’s circular or the Custom House, Public Notice relied upon by them, which are critical documents in this appeal. Copy of the said documents were produced during the hearing by the respondent. Further we find the allegations in the appeal to be general in nature and does not pinpoint any specific para of the Notification / Circular / Public Notice which has been violated or not adhered to so that the same could be examined in detail. Merely stating that ‘the review order was issued on grounds that the certificate is not emphatic to the effect that unjust enrichment is not applicable and the incidence of duty was not passed on to the ultimate customer’, will not suffice, a more focused approach is required. The para relevant to the issue of the Chartered Accountants Certificate as given in Board’s Circular No. 6/2008- Customs (F. No. 401/104/2007-Cus.III) dated 28.4.2008 (supra) is reproduced below:
“6. Unjust enrichment:
6.1. The 4% CVD exemption under the said notification is operated through a refund mechanism, wherein the importer would have to first pay the said 4% CVD at the time of importation and, thereafter, can claim refund of 4% CVD on production of documents showing that the appropriate ST/VAT has been paid. Hence, the purpose o f granting this exemption is to ensure that the importer pays either 4% CVD or the appropriate ST/VAT and not both. It is not the intention o f the Government to allow the importer to recover the 4% CVD from the buyer as well as to claim refund of this amount from Customs. Hence, the principle of unjust enrichment needs to be examined in each case before sanction of refund under this notification. However, considering the voluminous transactions and the documents involved in the cycle, from import to sale, it was felt that it would be expedient to allow the importer to submit a certificate from the statutory auditor / Chartered Accountant who certifies the annua l accounts of the importer, that the burden of 4% CVD has not been passed on by the importer to the buyer and to fulfill the requirement of unjust enrichment.
6.2. In view of the above, 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. ”
We find that the Boards Circular only requires the statutory auditor/Chartered Accountant who certifies the importer’s annual financial accounts under the Companies Act or any statute, to explain how the burden of 4% CVD has not been passed on by the importer and to fulfill the requirement of unjust enrichment. This is, as stated by the respondent, satisfied by the Chartered Accountant’s certificate.
We do not find grounds in the appeal strong enough to prima facie differ from the views of the respondent.
9. Based on the discussions as above, we reject the appeal filed by the Revenue and uphold the impugned order.
(Pronounced in open court on 17.4.2023)
