ORDER
C.N.B. Nair, Member (T)
1. The appellant Tanir Bavi power Company Pvt. Ltd., imported a Barge Mounted Power Plant and its accessories during the period December 2000 to February 2002. The import was registered as a project import and goods assessed to custom duty, including additional duty of customs, at the time of their clearance.
2. Subsequently, Finance Act 2002, under Section 130, granted retrospective exemption in respect of the whole of the additional duty of custom leviable during the period 8.12.2000 to 28.2.2002 in respect of Barge Mounted Power Plant. In terms of the said exemption the appellant claimed refund of the additional duty of customs (over Rs.93 crores) which had already been paid. The Assistant Commissioner of Customs sanctioned an amount of about Rs. 89 crores, thus, denying the refund of the remaining amount of over Rs. 4 crores. This was on the ground that the power project was commissioned on 8th June 2001 and between the date of commissioning the plant and the grant of refund, the appellant had passed on the duty payment equivalent to the said amount through the sale price of the electricity generated and sold to Karnataka Power Transmission Corporation Limited. The said amount was worked out by the Assistant Commissioner on the basis that the normal life of the power plant would be 30 years and the additional Customs duty is being passed through the fixed cost component of the price of electricity. The amount of refund denied was proportionate to the time period between commissioning of plant and grant of exemption.
3. M/s. Tanir Bavi Power Company Pvt. Ltd., challenged this order before the Commissioner (Appeals). The Revenue authorities also filed an appeal against the order before the Commissioner, contending that the Assistant Commissioner had erroneously taken the life span of the project as 30 years, and the life span should be taken as 7 years. Based on this contention, the Revenue pleaded for denying of a refund amount of about Rs.18 crores.
4. While the aforesaid appeals were pending before the Commissioner (Appeals), the aspect of unjust enrichment in regard to the refund claim was considered by parties concerned, including Department of Revenue. The appellant importer and M/s Karnataka power Transmission Corporation Limited entered into an agreement to pass on the benefit of the refund to power consumers through revision of “future tariff”. The department of Revenue considered this arrangement sufficient satisfaction of the bar of unjust enrichment contained in Section 27 of the Customs Act and issued letter dated September 5, 2003 to the Chief Commissioner of Customs, Bangalore. We read that letter:-
“To
The Chief Commissioner of Customs Bangalore
Sub : Refund claim of M/s Tanir Power Company Pvt. Ltd. – reg.
Sir,
I am directed to refer to your office letter F. No. VIII/48/78/2002/CC-Cus (BZ)/3452 Dated : 11.7.2003, on the above mentioned subject wherein it was stated that both M/s KPTCL and M/s. TBPCL have agreed that the benefit of the refund would be reflected in future transit.
2. The matter has been examined by the Board, In view of the agreement between M/s TBPCL and M/s. KPTCL that the benefit of the refund would be reflected in future tariff, the issue of unjust enrichment gets resolved. Therefore, all concerned are advised that wherever the refunds are held up to go ahead with the sanctioning of the same refunds.
3. As regards the amount of Rs. 4,13,82,988/- since the review period is already over the Commissioner of Customs may direct concerned adjudicating authority i.e. Assistant Commissioner (Refund) to apply to Commissioner of Customs (Appeals) for determination of correct position of the case as ascertained now so that case is decided by the Commissioner (Appeals) and amount could be refunded to M/s. TBPCL.
Yours Faithfully,
Sd/-
(D.S. Garbyal)
Under Secretary to the Government of India”
5. The Commissioner of Customs, Bangalore brought the above letter to the notice of the Commissioner (Appeals) and sought early disposal of the appeals. The Commissioner (Appeals) took this letter as tantamounting to withdrawal of the departmental appeal. The same was therefore rejected. However, in regard to the appeal filed by the importer the Commissioner upheld the order passed by the Assistant Commissioner. He held as under:-
“XX XX XX XX XX
As I have held that refund claim would have to pass the test of unjust enrichment, I Now propose to examine this aspect of the refund claim. The Hon’ble Supreme Court had enunciated the principle of unjust enrichment in the
“a duty of excise is levied on the manufacture or production of goods. Ordinarily, it is levied on the manufacturer or producer of goods (since the levy is in relation to or in connection with the manufacturer or production of the goods). The duty levied will form part of the total cost of the manufacturer or producer; that the levy being a component of the price for which the goods are sold, is ordinarily passed on to the customer; that it is a matter of common knowledge that every prudent businessman will adjust his affairs in his best interest and pass on the duty levied or leviable on the commodity to the consumer”.
The point Mode made here is that all costs including duties are normally passed on to the customers through the price mechanism. In the present case, the original adjudicating authority had held that an amount of Rs.4,13,82,988/- representing the additional duty collected in the 16 month period, between the date of commencement of the project and the date of sanctioning of the refund (8th June 2001 to end of September 2002) had been passed on to the customers and therefore credited the same to the Consumer Welfare Fund. From the facts, I find that there is a provision to pass on the duty through the fixed cost component of the tariff. In the absence of any evidence, it is to be presumed that the higher duty paid (retrospective amendment came later), was passed on to the customer through the fixed cost component of the tariff. during the period between the commencing of the plant 8th June 2001 to the date of sanctioning of the refund (end of September 2002). No evidence has been presented by the Appellants that this amount during the sixteen months period was not passed on. Section 28D of the Customs Act reads as follows:-
“Presumption that incidence of duty has been passed on to the buyer-Every person who has paid the duty on any goods under this Act shall, unless the controry is proved by him, be deemed to have passed on the full incidence of such duty to the buyer of such goods”.
In terms of this Section, it is for the person who has paid the duty to prove that the incidence of duty has not been passed on. In the absence of this, it is to be presumed that the full duty incidence has been passed on to the buyer of the goods. The Appellants have not presented any evidence to show that the pro rata additional duty amount, for the period between the commencing of the plant and the date of sanctioning of the refund, was not passed on to the customers. I therefore reject the Appellants appeal”.
6. The present appeal of M/s. Tanir Bavi Power Company Pvt. Ltd., challenges the denial of refund on the same grounds as taken before the Commissioner.
7. We have perused the record and heard the submissions made by both sides. We are of the opinion that the ground of unjust enrichment taken by the Commissioner is not sustainable in the facts of the present case. The facts are indeed unique. The exemption has been granted retrospectively after the levy of duty clearance of the goods and installation of the power plant. The project had also been commissioned. the issue of satisfaction of the bar of unjust enrichment also is required to be considered in this factual context. The aforesaid September 5, 2003 letter of the Department of Revenue specifically accepts that the agreement relating to future power tariff between the power producing company and the power transmission company takes care of the issue of unjust enrichment. That is to say, whatever refund is given to the power project would be passed on to consumers through reduction in future tariff. Para 2 of the said letter specifically states that “the benefit of the refund would be reflected in future tariff” and “the issue of unjust enrichment gets resolved” through adjustment in future tariff. Para 3 of the letter specifically related to over Rs.4 crore refund claim of the importer and the direction is for “determination of the correct position of the case as ascertained now so that case is decided by the Commissioner (Appeals) and amount could be refunded to M/s TBPCL”. “position of the case as ascertained now” could only be that the benefit of refund would be passed on to consumers through adjusting future tariff. Thus, the Board, which is incharge of administering customs revenue, was satisfied that the issue of unjust enrichment has been resolved through adjustment of future tariff and the withheld amount was to refunded. There is nothing in the order of the Commissioner justifying taking a contrary view on facts. Perhaps, it was not necessary also for him to go into the factual aspect of the matter since, at the highest level, a satisfactory arrangement had been worked out in regard to the refund claim. In fact, since the letter of the Board had clearly stated that the customs department was in agreement with the importer about the acceptability of the refund claim what was required of the Commissioner (Appeals) was only to note the agreement between the contending parties and allow the appeal.
8. In view of what is stated above, we hold that the denial of the refund is not correct or proper. The impugned order is, therefore, set aside and the appeal is allowed with consequential relief to the assessee. Since a refund which had been ordered in terms of the Budgetary provision of 2002 has already remained unpaid for about three years, the jurisdictional Assistant Commissioner is directed to make payment of the refund to the appellant within a period of 4 weeks from the receipt of a copy of this order.