2015 (6) TMI 1038 - AT - Customs

Period of limitation - Refund of excess duty paid in lieu of provisional assessment - Duty not been paid under protest - Import of Polypropylene Granules - Held that - the Assistant Commissioner while ordering provisional assessments stated that I order that the duty leviable on such goods to be assessed provisionally under Section 18 of the Customs Act 1962. Accordingly the procedure of provisional assessment under Section 18 be followed until further orders. From this it appears that the provisional assessment was done for such goods i.e. for all Bills of Entry during the period 16.5.1995 onwards and not for any particular Bill of Entry. Even the order finalizing the provisional assessments also refers to Ex-bond Bill of Entry No. 5 dt. 16.5.1995 and subsequent Bill of Entries. Therefore it would be reasonable to conclude that the Bills of Entry for the period January 1996 to 9th August 1996 were assessed provisionally. As regards the period from 9.8.1996 to February 1997 it is found that the Commissioner (Appeals) had accepted the appellants letter as a refund claim there being no evidence to the effect that the letter was not received by the Department. Even the order of the Assistant Commissioner does not categorically state that the letter dt. 28.3.1997 was not received by the department. Therefore since the department did not challenge the Commissioner (Appeals) order the refund for this period is not time barred. The contention of the appellant is also that the Bombay High Court order dt. 5.5.1997 setting aside the order of finalization dt. 9.8.1996 restores the status of provisional assessment in respect of all Bills of Entry filed upto the date of the High Court order and till the conclusion of the fresh adjudication proceedings. This contention merits acceptance because the High Court directed to continue the Bank Guarantee. In this view of the matter we hold that the assessments were provisional and the question of payment of duty under protest did not arise. Whether the test of unjust enrichment will apply to provisional assessments - Held that - in view of the various judgments the test of unjust enrichment will not apply to provisional assessments before 13.7.2006 when sub-section(5) to Section 18 was introduced. Sub-Section 18(5) brought the concept of unjust enrichment into Section 18. Therefore the test of unjust enrichment applies to refunds arising out of finalization of provisional assessments. - Decided against the appellant Whether the bar of unjust enrichment was crossed - Held that - there does not appear to be any doubt that the value of the finished products included the duty element because as admitted by the appellant due to charging of full rate of customs duty their total cost had increased. It is a well accepted fact that the price of finished goods depends on various factors such as raw material cost manufacturing cost market conditions demand and supply situation. Therefore only because they did not increase the price when they paid duty does not by itself lead to a conclusion that the incidence of duty was not passed to the customers. The appellant had argued before the Commissioner appeals that they were showing the refund claim as receivables in their books of account. However on being given time by the Commissioner they failed to produce a Chartered Accountants certificate certifying that the element of duty was not included in the cost of their products. Therefore in the absence of any evidence to the contrary it cannot be accepted that the duty element was not included in the price of the finished goods. Accordingly the incidence of duty had been passed on to the consumers of the finished goods and therefore the bar of unjust enrichment was not crossed. - Decided against the appellant

Issues Involved:
1. Applicability of Notification No. 64/95-Cus. for concessional duty.
2. Provisional assessment of duty under Section 18 of the Customs Act.
3. Time-barred refund claims.
4. Applicability of unjust enrichment principle to refunds from provisional assessments.

Issue-wise Detailed Analysis:

1. Applicability of Notification No. 64/95-Cus. for Concessional Duty:
The appellant, a manufacturer of BOPP Films and Electric Capacitor Grade Films, claimed a concessional rate of duty on the import of Polypropylene Granules under Sr. No. 145 List-B of Notification No. 64/95-Cus. The Assistant Commissioner initially assessed the goods provisionally under Section 18 of the Customs Act but later denied the benefit of the notification and directed the appellant to pay differential duty. The Bombay High Court set aside this order and remanded the case for fresh adjudication, after which the Assistant Commissioner extended the benefit of the notification. The Commissioner (Appeals) set aside this order, but CESTAT restored it, thus finalizing the issue on merits.

2. Provisional Assessment of Duty Under Section 18 of the Customs Act:
The Assistant Commissioner ordered provisional assessments for the goods under Section 18 of the Customs Act. The appellant argued that since the High Court set aside the final assessment order, the provisional assessment order was restored, implying all assessments were provisional. The tribunal agreed, noting that the provisional assessment covered all Bills of Entry during the relevant period, and thus the payments made were under protest, negating the need for a formal protest letter for each Bill of Entry.

3. Time-barred Refund Claims:
The appellant requested a refund of excess duty paid during the period January 1996 to February 1997. The Assistant Commissioner rejected the refund claim as time-barred, stating that the duty was not paid under protest. However, the Commissioner (Appeals) later treated the appellant's letter dated 28.3.1997 as a refund claim, thus not time-barred. The tribunal upheld this view, noting that the department did not challenge this order, and thus the refund claim was within the limitation period.

4. Applicability of Unjust Enrichment Principle to Refunds from Provisional Assessments:
The appellant contended that unjust enrichment does not apply to refunds from provisional assessments, citing various judgments. However, the tribunal referred to the Mumbai High Court judgment in the case of Bussa Overseas, which held that all claims of refund under the Customs Act must pass the test of unjust enrichment contained in Section 27. The tribunal noted that the appellant failed to provide evidence that the duty element was not passed on to the consumers, thus the principle of unjust enrichment applied, and the refund claim was not justified.

Conclusion:
The tribunal upheld the impugned order and dismissed the appeal, concluding that the assessments were provisional, the refund claim was not time-barred, but the principle of unjust enrichment applied, and the appellant failed to prove that the duty incidence was not passed on to the consumers.

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