2015 (2) TMI 1136 - AT - Customs

Validity of Advance License on the date of Ex-bonding of goods - Advance licence was not valid on the date of filing e-Bond Bills of Entry but were later revalidated up to 30-7-2008. Therefore, even if they were revalidated later, they covered the period when the ex-bond Bills of Entry were filed - Held that - the Customs allowed extension of the Bond period beyond 31-3-2008 which was denied by them earlier, so there would have been no problem for the appellant to wait till the Advance Licenses were got revalidated. Therefore, the appellant suffered only because the Customs refused to extend the Bond period beyond 31-3-2008 and no reason has been given by Assistant Commissioner of Customs to the appellant as to why further extension could not be granted to the appellant who are a PSU. It appears that, as is usual with the department, it was ambitious to get the huge amount of duty in furtherance of their objective of maximum revenue collection up to 31st March. Not granting extension of Bond period beyond 31-3-2008 when the Advance Licenses were still to be got revalidated from DGFT, is rather unfair on the part of the department. Had the department granted extension, this entire litigation could have been avoided. As the issue is more of a procedural nature than of a substantial nature, the Advance Licenses must be treated as valid at the time of ex-Bonding of goods. Refund claim - Admissibility - When the assessment not challenged by making any remarks about Advance Licenses on the Bills of Entry - Held that - the appellants are eligible for refund followed by the judgment in the case of Karnataka Power Corporation v. Commissioner 2002 (4) TMI 79 - SUPREME COURT OF INDIA Refund claim - Bar of Unjust Enrichment - Held that - the facts are not clear as to how the imported goods were dealt with, whether the imports were actually used to manufacture products for which prices have been fixed on import parity basis. Therefore, it needs to be looked into by the Commissioner (Appeals). - Decided partly in favour of appellant

Issues Involved:
1. Validity of Advance Licenses at the time of ex-Bond Bills of Entry.
2. Refund eligibility without challenging the original assessment.
3. Applicability of unjust enrichment doctrine.

Detailed Analysis:

1. Validity of Advance Licenses at the time of ex-Bond Bills of Entry:

The appellant, a Public Sector Undertaking engaged in refining crude petroleum, imported crude oil under the DEEC Scheme using Advance Licenses. However, the Customs authorities insisted on the payment of National Calamity Contingent Duty (NCCD) despite the appellant's contestation. The validity of the Advance Licenses expired, and although the Customs Bond period was extended, the Advance License validity extension remained under consideration. The appellant paid Basic Customs Duty under protest. The Tribunal noted that the Advance Licenses were later revalidated, covering the period when the ex-Bond Bills of Entry were filed. The Tribunal held that the Advance Licenses should be treated as valid on the date of ex-bonding of the goods, following the precedent set by the Bombay High Court in Bhilwara Spinners v. UOI, which allowed retrospective amendments by licensing authorities.

2. Refund eligibility without challenging the original assessment:

The appellant argued that the refund claim was valid under Section 27(ii) of the Customs Act, even without challenging the original assessment. They relied on several judicial precedents, including their own case in CESTAT and the Supreme Court's decision in Karnataka Power Corporation Ltd., which allowed reassessment and refund claims. The Tribunal agreed, distinguishing the present case from Flock India Ltd. and Priya Blue Industries, where the Supreme Court held that refunds are not payable without challenging the assessment. The Tribunal concluded that the appellant was eligible for a refund, following the judgments in Karnataka Power and Aman Medical Products.

3. Applicability of unjust enrichment doctrine:

The Tribunal considered whether the refund claim was barred by unjust enrichment. The Revenue argued that the appellant did not show the duty paid as receivable in their balance sheet, implying it was treated as an expenditure. The appellant contended that the price of finished petroleum products is determined on an import parity basis, and the entire production was exported, negating the issue of unjust enrichment. The Tribunal noted that the Commissioner (Appeals) had not adequately addressed this issue and remanded the matter for a thorough examination. The Tribunal emphasized that a detailed analysis, including a Chartered Accountant's certificate and cost structure, was necessary to determine if the duty incidence was passed on to customers.

Conclusion:

The Tribunal ordered that:
1. The appellant is eligible for a refund.
2. The issue of unjust enrichment is remanded for proper examination by the Commissioner (Appeals) based on facts and judicial precedents. The Commissioner (Appeals) must pass an order within four months, allowing for a personal hearing and potentially seeking a report from the adjudicating authority.

Disposition:

The appeal was disposed of in the above terms, with the Tribunal pronouncing the order in court on 11-2-2015.

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