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Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2006 (9) TMI AT This

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2006 (9) TMI 459 - AT - Central Excise

Issues Involved:
1. Provisional Assessment and Refund Claims
2. Doctrine of Unjust Enrichment
3. Applicability of Section 27 of the Customs Act
4. Refund of Countervailing Duty (CVD)
5. Opportunity to Establish Non-Passing of Duty Incidence

Detailed Analysis:

1. Provisional Assessment and Refund Claims:
The case involves the respondent importing eight consignments of Naphtha, with provisional assessments due to the absence of original documents. Upon finalization, it was found that the final invoice prices were lower, resulting in an excess duty payment of Rs. 2,54,96,721/-. The respondent filed refund applications for all consignments. The Assistant Commissioner rejected the claims, stating that the substantial part of the refund pertained to CVD, for which Modvat credit had already been availed, and the respondent had not submitted documents to establish that the incidence of duty was not passed on to customers.

2. Doctrine of Unjust Enrichment:
The Commissioner (Appeals) set aside the Assistant Commissioner's order, holding that the doctrine of unjust enrichment does not apply to provisional assessments. The Commissioner relied on the Supreme Court's decision in Mafatlal Industries and Allied Photographics India Ltd., asserting that refunds arising from the finalization of provisional assessments are not subject to the doctrine of unjust enrichment if they are not due to any court or tribunal order.

3. Applicability of Section 27 of the Customs Act:
The Revenue argued that the Commissioner (Appeals) erred in ignoring the Bombay High Court decision in Bussa Overseas, affirmed by the Supreme Court, which distinguished between refunds under Section 18(2) of the Customs Act and Rule 9B(5) of the Central Excise Act. The Revenue emphasized that under the Customs Act, refunds arising from the finalization of provisional assessments have always been subject to the procedure prescribed under Section 27, including the doctrine of unjust enrichment.

4. Refund of Countervailing Duty (CVD):
The respondent conceded that the refund of CVD duty would not be available if credit of duty had been taken. The Tribunal noted that the respondents had filed a separate refund claim, indicating the necessity of filing under Section 27, which requires examination by the officer, unlike suo motu refunds.

5. Opportunity to Establish Non-Passing of Duty Incidence:
The Tribunal concluded that all types of refunds, whether under the Customs Act or the Central Excise Act, are subject to the doctrine of unjust enrichment. However, it allowed the respondents an opportunity to establish that the incidence of duty was not passed on to customers, remanding the matter to the original adjudicating authority for further examination.

Conclusion:
The Tribunal held that the doctrine of unjust enrichment applies to all refunds and allowed the Revenue's appeal to this extent. It remanded the case to the original adjudicating authority to give the respondents an opportunity to rebut the presumption of passing on the duty burden to their customers. The appeal was disposed of accordingly.

 

 

 

 

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