2007 (8) TMI 518 - AT - Central Excise

Refund - Unjust enrichment - Held that - As is clear from the facts, the duty was deposited on provisional basis in respect of ship s bunkers and stores by working 110% of duty leviable on the quantity estimated to be consumed during the coastal run. The said deposit was made in terms of Board s Circular No. 58/97, dt. 6-11-97. As such, it was a case of estimated duty leviable when ultimately the duty liability was finally assessed, at the time of conversion of vessel from coastal run to foreign run, the same was found to be less than the duty deposited by the respondent - appeal dismissed.

Summary

Issues:
1. Provisional assessment of duty for ship's bunkers and stores during conversion of vessel from foreign run to coastal run.
2. Application of doctrine of unjust enrichment under Customs Act, 1962.
3. Appeal against rejection of plea by Commissioner (A) regarding unjust enrichment.

Analysis:
1. The case involved the conversion of a vessel from foreign run to coastal run by a company, leading to the provisional assessment of duty for the ship's bunkers and stores. The duty was paid based on an estimated quantity at the time of conversion, with the actual quantity being communicated later. Subsequently, a refund was sanctioned to the company after the final assessment of duty was completed.

2. The Department filed an appeal against the refund granted, contending that the adjudicating authority did not consider the doctrine of unjust enrichment as per the Customs Act, 1962. The Commissioner (A) rejected the appeal, stating that the Department failed to prove that the refunded duty amount had not been passed on to others by the company. The plea regarding the non-applicability of the doctrine of unjust enrichment for crediting the amount in the customer welfare fund was dismissed.

3. The Revenue then appealed the Commissioner (A)'s decision. The Tribunal analyzed the case and concluded that the duty was initially deposited on a provisional basis, following a circular, and was based on estimated consumption during the coastal run. Upon final assessment, it was found that the duty paid was more than the actual liability. The Tribunal agreed with the Commissioner (A) that the initial duty deposit was notional and that the doctrine of unjust enrichment did not apply in this scenario. Therefore, the Revenue's appeal was rejected.

In conclusion, the Tribunal upheld the decision of the Commissioner (A) regarding the application of the doctrine of unjust enrichment in the context of duty refund for the conversion of a vessel from coastal run to foreign run, based on the specific circumstances and legal provisions under the Customs Act, 1962.