2008 (9) TMI 773 - AT - Customs

Refund - Unjust enrichment - Held that - Revenue is not correct in raising the ground of unjust enrichment in this matter as the duty was deposited by the assessee after the Adjudication order, hence deposits are not hit by the Principles of Unjust Enrichment as noted by the Commissioner in the impugned order - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Payment of interest on refund amount.
2. Payment of interest on interest.
3. Application of unjust enrichment principle for refund.

Issue 1: Payment of interest on refund amount
The case involved a Revenue appeal regarding the payment of interest on the refund amount already sanctioned and interest on interest. The appellant had paid the duty amount demanded while their appeal was pending before CESTAT. After CESTAT remanded the matter to the lower authority, the appellant claimed that the department should have refunded the eligible amount within three months from the date of the order, citing various case laws and a Board's circular. The appellant argued that interest should be paid after the expiry of three months from the date of the final order. The Tribunal agreed with the appellant's claim, stating that any deposit made by the appellant during the pendency of an appeal must be returned within three months from the date of the final order. The Tribunal ordered payment of interest on the refunded amount for the period beyond three months from the date of the CESTAT order till the date of refund.

Issue 2: Payment of interest on interest
Regarding interest on interest, the Tribunal noted that there is no provision in the Customs Act, 1962 to order any interest on interest. This view was supported by a previous judgment. Therefore, the appellant's contention on interest on interest was not accepted. The Tribunal ordered the payment of interest on the refunded amount for the period beyond three months from the date of the CESTAT order till the date of refund.

Issue 3: Application of unjust enrichment principle for refund
The Revenue challenged the Tribunal's decision on various grounds, arguing that the refund of amounts can only be done under Section 27 of the Customs Act after satisfying all issues, including unjust enrichment. The Revenue contended that the aspect of unjust enrichment needed to be verified before ordering a refund. However, the Tribunal disagreed with the Revenue, stating that unjust enrichment did not apply in this case as the duty was deposited by the assessee after the Adjudication order. The Tribunal found no merit in the Revenue's appeal and rejected it.

In conclusion, the Tribunal upheld the appellant's claim for interest on the refunded amount beyond three months from the date of the CESTAT order, rejected the claim for interest on interest, and dismissed the Revenue's appeal on the grounds of unjust enrichment.