2003 (11) TMI 404 - AT - Central Excise

Summary

Issues Involved:
1. Applicability of the bar of unjust enrichment to the refund of Customs duty.
2. Distinction between abatement of duty under Section 22 and refund under Section 27 of the Customs Act.
3. Application of amended Section 27 to pending refund claims.
4. Proof of non-transfer of duty incidence to customers.

Detailed Analysis:

1. Applicability of the Bar of Unjust Enrichment to the Refund of Customs Duty:
The primary issue in this appeal was whether the bar of unjust enrichment applies to the refund of Customs duty claimed by the appellant. The appellant argued that their case involved abatement of duty on damaged goods under Section 22 of the Customs Act, which differs from the refund provisions under Section 27. They contended that Section 22 deals with the adjustment of duty based on the reduced value of damaged goods, and thus, the provisions of unjust enrichment under Section 27 should not apply.

2. Distinction Between Abatement of Duty Under Section 22 and Refund Under Section 27 of the Customs Act:
The appellant's counsel argued that Section 22 pertains to the abatement of duty on damaged or deteriorated goods, which is different from the refund provisions under Section 27. They emphasized that Section 22 involves re-assessment and adjustment of duty based on the reduced value of goods, and therefore, the refund procedure under Section 27 is not applicable. They cited various judgments to support their claim that the provisions of unjust enrichment should not apply to cases of abatement under Section 22.

3. Application of Amended Section 27 to Pending Refund Claims:
The Tribunal examined whether the amended provisions of Section 27, which include the bar of unjust enrichment, apply to the appellant's refund claim. The Tribunal noted that the appellant's refund claim was pending when the amendments to Section 27 came into effect on 19-9-1991. The Tribunal referred to the Supreme Court's judgment in Mafatlal Industries Ltd. v. UOI, which upheld the retrospective application of the amended Section 27 to pending proceedings. The Tribunal concluded that since the refund claim had not been finalized unconditionally before the amendment, the provisions of unjust enrichment under the amended Section 27 were applicable.

4. Proof of Non-Transfer of Duty Incidence to Customers:
The Tribunal considered whether the appellant had successfully demonstrated that the incidence of duty had not been passed on to their customers. The appellant argued that the damaged raw material resulted in inferior quality final products, which were sold at a lower price, and thus, the duty burden was not passed on. However, the Tribunal found that the appellant had not provided sufficient documentary evidence to substantiate their claim. The Tribunal noted that the Chartered Accountant's certificate and other documents submitted by the appellant did not conclusively prove that the incidence of duty had not been passed on to the customers.

Conclusion:
The Tribunal concluded that the refund of any duty is regulated by the provisions of Section 27 of the Customs Act, and the claimant must establish that the incidence of duty has not been passed on to any other person. The Tribunal held that the appellant's refund claim was subject to the bar of unjust enrichment under the amended Section 27, and the appellant had failed to provide sufficient evidence to prove that the duty burden was not passed on to their customers. Consequently, the Tribunal rejected the appeal filed by the appellant.