COLLECTOR CUSTOMS vs CHINIOT ENTERPRISES (PVT) LIMITED S — 2025 PTD 1424 PESHAWAR-HIGH-COURT

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COLLECTOR CUSTOMS VS CHINIOT ENTERPRISES (PVT) LIMITED S. 11---Customs act (IV of 1969), Ss.19a & 33, 'proviso'---Excess paid Federal Excise Duty (FED)---Refund, claim for---Entitlement---Excess paid duty passing onto the consumer, incidence of---Effect---Refund of excess duty not admissible if incidence has passed on to consumer---Scope---Refund justified where the excess duty was not passed on to the consumer---Collector Customs challenged the decision of the Customs appellate Tribunal, which had upheld the refund of 1% excess Federal Excise Duty (FED) to respondent---The respondent imported edible oil and was charged 17% FED during a period when the applicable rate was 16%---The collector had denied the refund, arguing the burden had been passed to the consumer---However, the respondent proved through sales records that product prices remained unchanged, hence the burden was not transferred---Validity---Only controversy between the parties was as to "whether the excess recovered FED was refundable to respondent or not?"---Held: Careful perusal of S. 11 of Federal Excise act, 2005 (the act, 2005) revealed that the refund claim for excess payable/paid duty was not admissible if the incidence of such excess paid duty had passed on to the consumer---The petitioners took the stance that under S. 19a of the Customs act, 1969, it would be presumed that the incidence had been shifted to consumer---Presumption under S. 19a ibid only prevailed when the person paying duty had failed to prove that the incidence of excess paid duty was not passed on to buyer---In the present case, the situation was, however, different---The Collectorate of Customs (appeals), Islamabad, during hearing of appeal, required the respondents to produce their Sales Tax Register for the month of relevant period wherein it was found that the sale price of the final product was not enhanced by them---accordingly, it was rightly held by the Collectorate of Customs (appeals) that the respondent had not passed on the excess paid duty to consumer---In the present case, there was no proof that the excess paid duty was passed on to the buyer, rather it was proved that the duty was recovered on raw material before manufacturing of final product and it was paid by the manufacturer himself and the rates were not enhanced as a consequence of payment of such excess duty---Secondly the proviso to S. 33 of the Customs act, 1969 would become redundant when the refunds becomes due in consequence of any decision by the appropriate officer of Customs or Board, or the appellate Tribunal or the Court---Refund in question became due upon order passed by the Collectorate of Customs (appeals), Islamabad, as such benefit could not be claimed by the petitioners under Proviso to S. 33 of the Customs act, 1969---Excess duty recovered by the petitioners from respondents was refundable because its burden was not passed on to intermediary or end consumer---Present tax reference was dismissed, in circumstances.

COLLECTOR CUSTOMS vs CHINIOT ENTERPRISES (PVT) LIMITED S — 2025 PTD 1424 PESHAWAR-HIGH-COURT

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