2006 (11) TMI 503 - AT - Customs

Refund of pre-deposit - Unjust enrichment - classification of imported consignment - HELD THAT - We find that the Commissioner (Appeals) reliance on the Supreme Court s decision in the case of Sahakari Khand Udyog Mandal Ltd. 2005 (3) TMI 116 - SUPREME COURT is not appropriate inasmuch the issue before the Hon ble Supreme Court was not as regards the refund of pre-deposit made for the purposes of hearing of the appeal. On the other hand we find that the Hon ble Supreme Court s in the case of CCE Hyderabad v. ITC Ltd. 2004 (12) TMI 90 - SUPREME COURT by taking note of the Board s Circular has ordered payment of interest on refund accruing to the assessee as a result of success of their appeal. The Tribunal has also considered the said issue in a number of matters and has held that such amounts deposited after adjudication have to be treated as deposits and not duties and would not attract the provisions of unjust enrichment. The Board s Circular No. 275/37/2K-CX.8A has examined the issue relating to the refund of pre-deposit made during the pendency of the appeal and it was decided that since the practice in department had all along been to consider such deposits as other than the duty such deposits should be returned in the event the appellants succeeds in appeal or the matter is remanded for fresh adjudication. As is seen from the Circular of the Board the deposits made during the pendency of the appeal automatically become refundable to the lessee on success of their appeals without the assessee having made any refund application. As such deposits are basically in the nature of a condition of hearing of the pending appeal. In any case in the present case the imports were effected during the period 1994 to 97 and the deposits were made by the appellants in the year 2000 during the pendency of the appeal before the Hon ble Supreme Court. As such in our view it cannot be reasonably concluded that the same would be hit by the bar of unjust enrichment. We accordingly set aside the impugned order of the Commissioner (Appeals) and restore the order of the Assistant Commissioner. The appeal is allowed in above terms.

Summary

Issues:
1. Correct classification of imported consignment of "Alpha Olefin C-14".
2. Entitlement to refund of deposits made by the appellants.
3. Applicability of provisions of unjust enrichment in the refund process.

Analysis:

Issue 1: Correct Classification
The dispute in this case revolved around the correct classification of the imported consignment of "Alpha Olefin C-14." The appellants claimed classification under Chapter 29, while the revenue classified it under Customs Tariff Heading 27.10. The matter went up to the Tribunal and then to the Hon'ble Supreme Court, which remanded the issue back to the original adjudicating authority. The original authority accepted the appellant's claim of classification under Heading 2901, which was not disputed.

Issue 2: Entitlement to Refund
Upon the settlement of the classification dispute in favor of the appellants, they became entitled to a refund of the deposits made by them in compliance with the Supreme Court's direction. The Assistant Commissioner of Customs, in his order, sanctioned the refund of the deposited amount, emphasizing that the deposit was not considered as a duty and therefore not subject to limitations under the Customs Act, 1962. The Assistant Commissioner relied on legal precedents and held that the provisions of unjust enrichment did not apply in this case, leading to the refund sanction.

Issue 3: Applicability of Unjust Enrichment
The revenue appealed the Assistant Commissioner's order before the Commissioner (Appeals), arguing that the provisions of unjust enrichment should apply. The Commissioner (Appeals) referred to a Supreme Court decision and set aside the order, stating that the lower authorities had not examined the issue of unjust enrichment. However, the Tribunal disagreed with this interpretation, emphasizing that the Supreme Court's decision cited was not directly relevant to the refund of pre-deposit made for appeal purposes. The Tribunal highlighted the applicability of interest on refunds as per legal provisions and circulars, asserting that the deposits made during the appeal process were refundable upon success of the appeal, without the need for a formal refund application.

In conclusion, the Tribunal set aside the Commissioner (Appeals) order and reinstated the Assistant Commissioner's decision to refund the deposited amount to the appellants. The Tribunal's ruling was based on the nature of the deposits as a condition of the appeal process and the established practice of refunding such deposits upon appeal success.