Full Judgment
2. The ground in the appeal is that the requirement contained in Sub-section (2) of Section 27 of the Act that it must be shown that the incidence of duty has not been passed on, will apply equally to the goods which are not sold.3. The departmental representative reiterates these grounds pointing out that the judgment of the Bombay High Court is no longer good law, having been reversed by the Supreme Court in its judgment reported in 2000 (116) ELT 401.
4. The representative of the respondent contends as follows: The judgment of the Supreme Court in Solar Pesticides Pvt Ltd v. Union of India did not relate to capital goods, which is what the imported goods are. The Assistant Commissioner, in his order, has accepted that the respondent bore the incidence of duty and this has not been challenged.
The respondent utilised the goods for generating maps and drawings, which it gave to the customer, and did not sell the goods themselves.
The bill that it has issued did not bear any column for it. Therefore, the incidence of duty has not been passed on. The reliance on the decision of the Tribunal in CCE v. Metro Tyre Ltd 1996 (86) ELT 95.
5. The contention that, where the goods (duty upon which is paid) are not sold but are used by the importers, the requirements of showing that the incidence of duty has not been passed on, is not acceptable.
Paragraph 20 of the Supreme Court judgment in Union of India v. Solar Pesticides Pvt Ltd makes this clear. It says "To claim refund of duty it is immaterial whether the goods are used by the importer himself and the duty thereon passed on to the purchaser of the finished product or that the imported goods are sold as such with the incidence of tax being passed on to the buyer. In either case the principle of unjust enrichment will apply." A distinction has to be made between the payment of tax and the incidence of that tax. An importer of any goods initially pays the duty burden which rests on him. This is what the Assistant Commissioner said and he is right. However, the question is whether the incidence of such duty is passed on. Even in terms of simple economics it will be evident with the proposition that the incidence of duty is not passed on merely because the goods are themselves not sold is not maintainable. In a very large number of machines, equipment etc are used by their importers or purchasers in order to services or other goods. It will be absurd to accept that, in each of these situation, the incidence of duty paid on the goods have not been passed on. It would, in effect, amount to saying that a manufacturer of biscuit does not build in to the cost of sale of particulars of the biscuits that he makes, the substantial amount of Customs or Excise duty that he has paid to the seller of the machines that he bought in order to make the biscuits, or that the incidence of duty paid on an aircraft or on the fuel consumed in it is not passed on as part of the fare to the passenger in that aircraft. This argument is entirely unacceptable.
6. The Assistant Commissioner in his order said that with reference to Section 28D of the Act, it has not been shown that the incidence of duty has not been passed on. Section 28D contain a presumption that every person, who has paid the duty on any goods, shall, unless contrary is proved by him, be deemed to have passed on full incidence of such duty to the buyer of such goods. He is right when he says that there being no sale, no such presumption in terms of Section 28D will apply. We are however not concerned with this. We are concerned with the applicability of Sub-section (2) of Section 27. In that regard, he has specifically concluded that the incidence of duty has not been shown to have passed on. If he has concluded otherwise, his order would not have been appealed by the Commissioner before the Commissioner (Appeals).
7. The question before the Tribunal in Metro Tyres Ltd v. CCE was not the applicability of the provisions of Sub-section (2) of Section 11B of the Central Excise Act, which contain the same provisions with regard to passing of incidence of duty finding in Sub-section (2) of Section 27 of the Customs Act. We have to keep in mind the provisions of Sub-section (2) of Section 27 of the Customs Act and the provisions of Sub-section (2) of Section 11B of the Central Excise Act which rests the burden of the duty that has not been passed on by the claimant to any other person. In any event, the fact of the amount of duty is not separately shown in the bill that the respondent issued for the products that it obtained by using the goods in question, it is not established that the incidence of duty has not been passed. The very possibility that it would be included in the price that would be the normal price in this case. It is not necessary that the bill shown the incidence of duty separately. There is no such requirement in law either.
8. It has therefore to be concluded that the requirement contained in law that for a claimant to be given the refund, it must be shown that he has not passed on the incidence of duty would apply to the refund that the respondent claimed and that the respondent has not been able to show that the incidence of duty has not been transferred. We are therefore of the view that the refund in question has been correctly credited to the Consumer Welfare Fund Account instead of being paid to the respondent.
9. Accordingly, we allow this appeal, set aside the impugned order of the Commissioner (Appeals) and restoring the order of the Assistant Commissioner .