2016 (7) TMI 1298 - HC - Customs

Grant of refund with interest - whether the amount deposited as pre-deposit entitled to refund even without formal application or not? - Held that - Circular No.275/37/2KCX. 8A dated 2/1/2002 clearly indicates that the amount received u/s 35F has to be given as refund even without a formal application. The provisions u/s 129E is in pari materia with the provision under Section 35F - This is a case in which amount had been deposited under protest during the pendency of the appeal and the petitioner is entitled to refund - petition allowed - decided in favor of petitioner.

Summary

Issues involved:
Challenge to refund sanction, obligation to refund pre-deposit under Customs Act, compliance with statutory provisions, doctrine of unjust enrichment, scope and effect of Sections 129E and 129EE, entitlement for refund under protest deposit.

Analysis:
The writ petition challenges Ext.P3 and seeks a direction for the 3rd respondent to sanction and refund the amount deposited by the petitioner under protest. The petitioner deposited the amount as differential import duty, pending an appeal before the Commissioner of Central Excise and Customs and subsequently before the Customs, Excise and Service Tax Appellate Tribunal. The Tribunal allowed the appeal, classifying the goods correctly under a specific heading of the Customs Tariff. The Supreme Court upheld this decision and directed refund of any excise duty paid by the petitioner. The petitioner filed for refund, but a show cause notice (Ext.P3) was issued, requesting documents for verifying unjust enrichment. The petitioner argued that the amount was a pre-deposit under the Customs Act, obligating the department to refund it upon a favorable decision. Reference was made to judgments emphasizing the duty of the assessing authority to refund amounts upon appeal success without unjust enrichment considerations.

Regarding the scope and effect of Sections 129E and 129EE, the Court cited precedents highlighting the duty of the assessing authority to refund amounts covered by appellate orders without delay or formal request. The government's obligation to refund amounts due to citizens was stressed, even without explicit requests. The circular issued by the Board underscored that refunds under Section 35F should be made without formal applications, aligning with the provisions of Section 129E. The Court concluded that the petitioner, having deposited the amount under protest during the appeal, was entitled to a refund, dismissing any concerns of unlawful enrichment.

In light of the factual and legal issues, the Court allowed the writ petition, setting aside Ext.P3 and directing the 3rd respondent to refund the entire amount with applicable interest within one month. The petitioner was only required to provide an indemnity bond if any additional documents were necessary for the refund process. The judgment affirmed the petitioner's entitlement to the refund, emphasizing the obligation of the assessing authority to promptly refund amounts upon appeal success without unjust enrichment considerations.