2007 (1) TMI 366 - AT - Customs

Summary

Issues:
1. Proper remedy for the department regarding an erroneously refunded duty.
2. Applicability of Section 129D(2) of the Customs Act in the case.
3. Examination of the legal issue of erroneous refund by the appellate authority.

Analysis:
1. The appellants imported a "High Speed Warping Machine" and cleared it under a Bill of Entry, paying duties under protest. The party appealed to the Commissioner (Appeals) and was granted a refund based on a concessional rate. The department reviewed the refund under Section 129D(2) of the Customs Act, leading to an appeal by the department against the erroneous refund.

2. The Senior Advocate argued that the appropriate remedy for the department, if aggrieved by the refund, should have been under Section 28(1) of the Customs Act, not Section 129D(2). The Tribunal agreed with this contention, emphasizing that the department's recourse for recovering erroneously refunded duty lies under Section 28(1) and not Section 129D(2).

3. The Tribunal noted that the appellate Commissioner rejected the refund claim on the grounds of unjust enrichment, which was incorrect as the refund had already been processed by the original authority. The department's appeal was against the erroneous refund, not the refund claim itself. The Tribunal set aside the appellate Commissioner's order and remanded the case for a proper examination of the legal issue of erroneous refund.

In conclusion, the Tribunal allowed the appeal by way of remand, directing the Commissioner (Appeals) to reexamine the legal issue raised by the party and proceed accordingly, emphasizing the distinction between a refund claim and an erroneous refund.