Relief for Vivo: CESTAT Orders Refund of Excess CVD, Rejects Consumer Welfare Fund Claim [Read Order]

The Delhi Bench of Customs,Excise and Service Tax Appellate Tribunal(CESTAT)  provided relief to Vivo Mobile India Pvt. Ltd. by ordering a refund of Rs. 1,67,79,311 in excess countervailing duty (CVD) paid on mobile phone imports, rejecting the Commissioner (Appeals) decision to credit the amount to the Consumer Welfare Fund.

Vivo Mobile India Pvt. Ltd.,appellant-assessee,imported mobile phones between June 8, 2015, and June 18, 2015, and paid a 12.5% CVD on four Bills of Entry. The appellant did not receive the benefit of a concessional 1% CVD rate under a Notification from March 2012, amended in March 2015.

The assessee appealed the assessment, arguing they were entitled to the concessional rate based on the Supreme Court's decision in SRF Ltd. The Commissioner (Appeals) rejected the appeal on June 29, 2016. The assessee then approached the Tribunal, which ruled in their favor on January 5, 2017, ordering the adjudicating authority to reassess the claim. Following this, the Deputy Commissioner reassessed the Bills of Entry and applied the 1% CVD rate, resulting in a refund application for the excess CVD of Rs. 1,67,79,311 on March 8, 2018.

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The Superintendent (Refund) requested additional documents, which the appellant provided. On June 15, 2018, the Assistant Commissioner (Refund) sanctioned the refund, confirming the excess CVD payment. The Assistant Commissioner also found that the appellant had not passed on the excess CVD to buyers, meeting the unjust enrichment condition.

The department appealed, arguing the refund was barred by limitation and should be credited to the Consumer Welfare Fund. The Commissioner (Appeals), on July 5, 2021, agreed that the refund was timely but ruled that the assessee had not proven the excess CVD was not passed on to buyers. As a result, the refund was directed to be credited to the Consumer Welfare Fund, leading the assessee to file an appeal.

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The two member bench comprising Justice Dilip Gupta (President) and  C.J Mathew (Technical Member) examined whether the refund amount should be directed to the Consumer Welfare Fund or paid to the appellant.It was agreed that the appellant had paid an excess amount of Rs. 1,67,79,311.90/- towards CVD, and the refund claim was filed on time. The Assistant Commissioner (Refund) reviewed the Books of Account and Financial Statements for the year 2015-16, noting that the recoverable duty was shown under "Short-term Loans & Advances."

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The Assistant Commissioner also considered a Chartered Accountant's Certificate dated 09.04.2018, confirming that the duty burden was not passed on to the buyers, and concluded that the appellant had met the requirements to rebut unjust enrichment.

However, the Commissioner (Appeals) disagreed, questioning the inclusion of the refund amount in the Balance Sheet and the validity of the Chartered Accountant's Certificate. The Commissioner argued that the Certificate referred only to provisionally assessed Bills of Entry, not the final assessments related to the refund claim, and concluded it lacked necessary details.

The assessee provided additional evidence, including the Chartered Accountant's Certificate dated 31.01.2024, confirming the excess CVD amount was part of the customs duty receivable in the Financial Statement. The tribunal found this evidence convincing and determined that the refund amount was correctly shown as receivable from customs.

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The appellate tribunal also disagreed with the Commissioner’s view that the Certificate only applied to provisional Bills of Entry. The Certificate clarified that the provisional Bills had been finalized with a reduced duty rate of 1%, making the excess duty refundable.

The CESTAT referred to several decisions supporting the view that a Chartered Accountant’s Certificate, when consistent with financial statements, is valid evidence that the duty was not passed on to the buyers. These decisions established that it is up to the Revenue to provide evidence proving that the duty was passed on.

The tribunal found that the Commissioner (Appeals) had wrongly doubted the assessee’s books without seeking clarification. As a result, the order directing the refund to the Consumer Welfare Fund was set aside, and the assessee was entitled to a refund with interest. The appeal was allowed.

To Read the full text of the Order CLICK HERE

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