2007 (9) TMI 516 - AT - Customs

Summary

Issues:
1. Refund claim based on unjust enrichment.
2. Legality of encashment of bank guarantee.
3. Examination of refund application against unjust enrichment principle.
4. Proper procedure for reconsideration of refund claim.

Analysis:
1. The appeal involved a refund claim by the appellant based on unjust enrichment. The appellant claimed a refund after the assessment order demanding a differential duty was set aside. The original authority sanctioned the refund, stating unjust enrichment would not apply in this case. However, the department appealed, arguing that unjust enrichment was not examined properly. The Tribunal held that unjust enrichment should be considered in every case, including provisional assessments. The Commissioner's order setting aside the refund without re-examining it for unjust enrichment was deemed improper.

2. The legality of the encashment of the bank guarantee was disputed. The appellant argued that since the final assessment order was set aside, the encashment should be considered illegal. The Tribunal determined that once the duty was adjusted following finalization, the encashment amounted to payment of duty, regardless of how it was collected. The responsibility to prove that the burden of duty was not passed on to the consumer rested on the appellant.

3. The examination of the refund application against the principle of unjust enrichment was crucial. The Tribunal emphasized that the department should review the refund claim for legality, propriety, and correctness. The Commissioner's order was set aside for not properly examining the claim from the angle of unjust enrichment. The Tribunal remanded the matter to the original authority for reconsideration, requiring the appellant to provide evidence within a specified timeframe.

4. The proper procedure for reconsideration of the refund claim was outlined by the Tribunal. The original authority was directed to reconsider the claim from the perspective of unjust enrichment, granting the appellant an opportunity to present evidence. The decision was to be made promptly and with a hearing opportunity provided. Ultimately, the appeal was allowed by way of remand for further examination in accordance with the Tribunal's directions.