2015 (6) TMI 997 - AT - Customs

Refund claim - Rejected on Unjust Enrichment - 1% National Calamity Contingent Duty paid by mistake by way of draft - Held that - once the amount is shown as recoverable it is not material in Balance-sheet under which head it is classified. Also if the amount is shown as receivable or recoverable from the Customs Department then the question of unjust enrichment does not arise. Here as the appellant being a manufacturer of fabric there is no reason to examine its sales invoices etc. Therefore refund is allowed. - Matter remanded back

Summary

Issues:
Refund claim rejection upheld on unjust enrichment grounds.

Analysis:
The appellants appealed against Orders-in-Appeal rejecting the refund claim due to unjust enrichment. The appeals related to the refund of 1% National Calamity Contingent Duty (NCCD) mistakenly deposited. The appellants, textile fabric manufacturers, imported polyester filament yarn and paid duty, including the wrongly paid NCCD of Rs. 12,947. The adjudicating authority allowed the refund on merit but rejected it for unjust enrichment. The rejection was based on the appellants' failure to correlate the refundable amount with the Bill of Entry. The balance sheet showed discrepancies, such as the duty paid date discrepancy and the refund claim amount being classified as investment instead of loans and advances. The absence of the 2010 balance sheet further complicated the issue. The adjudicating authority emphasized the need to examine the cost and pricing of goods sold to determine if the duty burden was passed on. The absence of sale invoices for the imported yarn weakened the appellants' claim of not transferring the duty burden.

The Commissioner (Appeals) upheld the rejection, leading to the appellant's appeal to the Tribunal. The appellant argued that the duty payment date discrepancy should not lead to adverse inferences as they accounted for it on a cash basis. The classification of the recoverable amount in the balance sheet should not affect the refund eligibility. The appellant submitted a Chartered Accountant certificate stating that the duty burden was not passed on, supporting their claim.

The Tribunal found the absence of the 2010 balance sheet crucial and remanded the matter to the adjudicating authority for examination. The classification of the recoverable amount in the balance sheet was deemed immaterial, emphasizing the need to review subsequent balance sheets. The Tribunal held that the appellant's status as a fabric manufacturer negated the necessity to scrutinize sale invoices. The matter was remanded for further examination, directing the adjudicating authority to decide within two months from the order receipt and the appellants to appear for a hearing.

In conclusion, the appeals were allowed by way of remand, emphasizing the importance of examining subsequent balance sheets to determine unjust enrichment and directing a swift resolution by the adjudicating authority.