Judgment:
1. For reasons recorded below, we reject the applications of the Revenue for stay of operation of the order of the Commissioner (Appeals) by which he has held that bar of unjust enrichment does not operate against the respondents herein who are importers of cranes, merely on the ground that they claimed depreciation of capital goods for Income Tax purposes, and proceed to hear and decide the appeals themselves at this stage with the consent of both sides.
2. The brief facts are that the respondents herein imported truck cranes, which were allowed clearance under heading 8426.41. The Commissioner (Appeals) in appeal filed by the importers held that the correct classification would be CTA heading 8426.91 and the cases were remanded for consideration of this classification. The adjudicating authorities classified the goods under heading 8426.91 on the basis of the decision of the Commissioner (Appeals). As a result, the importers claimed refund of excess duty paid, which had arisen as a result of consequential relief. The Deputy Commissioner before whom the claims for refund were considered, held that, by claiming depreciation from the capitalised amounts in respect of the subject goods, which includes the excess duty claimed as refund, the applicants had passed on the excess duty incidence to their clients/customers by including excess customs duty in the landed cost of impugned capital goods for depreciation purposes. The relevant paragraphs of the finding of the adjudicating authority are reproduced below:- "I find that entire expenditure on imported equipment in this case (including the amount claimed as refund) was capitalised as per general accounting principles and depreciation has been claimed and availed. Following the ratio of decision in the case of M/s. Onyx Marble India, it is clear that the depreciation which represents the cost of capital goods at a specified percentage is, obviously included in the hiring charges or their yearly turnover in this case also, thereby indirectly passing on the duty incidence to other person. As held in Solar Pesticides and Punj Sons Pvt. Ltd., cases (supra), no manufacturer will exclude the duty paid on capital goods from the price of the finished products and consequently bear the entire burden of duty or cost of capital goods without passing the same to the buyers of the end product. As the total landed cost towards capital goods is generally not possible to pass on fully within the accounting year itself, it is an established practice to amortize such cost over a period of time and to claim deduction from sales turnover/gross profit by way of depreciation at a fixed or variable percentage every year. In the present case the excess duty claimed as refund having been depreciated and deducted in the profit and loss account from the gross profit, the same stands adjusted appropriated from the gross sales turnover or gross receipt of hiring charges, thereby clearly indicating that it has been indirectly passed on to the clients/customers of the applicant over a period of time.
From the above, I find that the excess customs duty claimed as refund has not been borne by the applicant but the same was capitalized and depreciation claimed every year by amortizing and including the same in hiring charges of the crane in question. By including the impugned excess customs duty in the landed cost of the crane and, thereby, taking the depreciation to the extent of 40% every year, the appellant, obviously, have got higher deduction form the their sales turnover/gross profit to arrive at the taxable net profit which was to their advantage. I therefore, hold that having recovered, though indirectly, the duty claimed as refund in the above manner, the claimant is not entitled to receive the refund under Section 27(2) of the Customs Act, 62 and that the refundable amount in such a case is required to be credited to Consumer Welfare Fund under the said provision." 3. In appeal before the Commissioner (Appeals), the importers argued that the depreciation had been claimed in the balance sheet only for the purpose of Income Tax and they claimed for the depreciation had no relevance to the claim for refund of custom duty admittedly paid in excess. The Commissioner (Appeals) accepted this plea and allowed the appeals of the importers, resulting in appeals filed by the Revenue before the Tribunal.
5. We find substance in the submission of the respondents/importers that the incidence of duty cannot be held to have been established to have been passed on, solely on the ground that the claim for depreciation had been made for the Income Tax purposes by the importers. The claim for depreciation under income tax provisions is distinct and separate from the claim for refund in terms of Customs Act. The appellants have also produced a Chartered Accountant's certificate dated 22/05/2001 certifying that the appellants have borne the burden of extra duty paid which has been reflected in their balance sheet and has not been passed on to any other person. They have also stated that the impugned crane under import is being used by them for hiring purposes and since the hiring charges are fixed on all India basis by Crane Owners Association, the extra duty paid by them could not be recovered by increasing the hire charges. Therefore, we are of the view that the Revenue has not made out a case for reversing the orders of the Commissioner (Appeals). Accordingly, we uphold the impugned order and reject the appeals.