V.K. Agrawal, Member (T)
1. In these three appeals preferred by Revenue, the issue involved is whether provisions regarding unjust enrichment are applicable to the import of capital goods.
2. Shri S. Sudarsan, Learned DR, submitted that applicability of the provisions relating to unjust enrichment in respect of goods captively consumed has been settled by the Supreme Court in the case of UOI v. Solar Pesticides Pvt. Ltd. ; that respondents have imported Autoconer Machines and captively used in the manufacture of cotton yarn and applying the ratio of the decision of the Supreme Court in Solar Pesticides Pvt. Ltd’s case refund is not admissible to them unless and until they are in a position to satisfy that incidence of duty has not been passed on to their customers.
3. Shri A. Vijayaraghavan, Learned Consultant, submitted that the issue before the Supreme Court in Solar Pesticides case was in respect of raw material which was captively consumed in the manufacture of finished goods; that the Supreme Court in the cited case has not considered the captive use of capital goods; that in this case of capital goods, even incidence of duty is not passed on indirectly to the customers since the manufacturer has eligibility to take depreciation under the provisions of the Income Tax Act. Ld. Consultant further submitted that on account of slump in the textile market, their prices have remained same even after importation of the Autoconer Machines and using the same. He also mentioned that prices have remained same even though the price of the cotton was going up. All these facts taken together will clearly indicate that they had not passed on even indirectly the incidence of customs duty paid in excess on the autoconer machine imported by respondents. He finally submitted that as the Commissioner (Appeals) has not considered the matter on merits and only has decided the appeal following the decision of the Supreme Court in the case of Solar Pesticides Pvt. Ltd. supra, the matter may be remanded to the Asst. Commissioner for considering the matter on merits.
4. We have considered the submissions of both sides. The Supreme Court in Solar Pesticides Pvt. Ltd. case (supra) has held that the expression “incidence of such duty” in relation to its being passed on to another person would take within its ambit not only the passing of the duty directly to another person but also cases where it is passed on indirectly. The question of incidence of duty, whether directly or-indirectly, has to be decided by the Asst. Commissioner on the basis of evidence led by the manufacturers or the importers claiming the refund of the duty. We find that both Asst. Commissioner and Commissioner (Appeals) have dealt the claims on the basis of the case-laws and without going into the merits, whether the incidence of duty was passed on or not. In view of this fact, we find no other way but to remand all three matters to the Commissioner for deciding the case afresh after affording the opportunity to respondents for adducing the evidence, whatever they deem fit, and after affording a personal hearing to them. Accordingly, we allow all the three appeals filed by Revenue by way of remand.