2010 (8) TMI 687 - AT - Customs

Claim for refund - unjust enrichment - Provisional assessment - - During the period of dispute the appellant followed provisional assessment - Held that - in a case of adjustment (following finalization of assessment) the doctrine of unjust enrichment cannot be kept out - all claims for refund must meet the test of unjust enrichment.

Issues Involved:
1. Applicability of the principle of unjust enrichment to refunds arising from the finalization of provisional assessments.
2. Whether refunds should be granted if the unit suffered a loss and did not pass on the duty to customers.

Issue-wise Detailed Analysis:

1. Applicability of the Principle of Unjust Enrichment:

The primary issue in these appeals was whether the principle of unjust enrichment applies to refunds arising from the finalization of provisional assessments. The appellant, M/s. Mangalore Refineries & Petrochemicals Ltd. (MRPL), argued that the principle of unjust enrichment should not apply to refunds for the period prior to 13/7/2006, relying on several judicial precedents, including judgments from the Hon'ble High Court of Gujarat and the Tribunal. They cited cases such as CC Vs. Hindalco Industries Ltd., CC Vs. Hindustan Zinc Ltd., and A.P. Gas Power Corporation Ltd. Vs. CC, which held that unjust enrichment does not apply to refunds from finalization of provisional assessments.

The appellant also referenced the Tribunal's decision in CCE Vs. TVS Suzuki Ltd., which was upheld by the Supreme Court, stating that the bar of unjust enrichment is not applicable in such cases. Additionally, the appellant relied on the Supreme Court's judgment in Mafatlal Industries Ltd. Vs. UOI, arguing that refunds arising from finalization of provisional assessments under Section 18 of the Customs Act, 1962, are not governed by Section 27 of the Act.

The Revenue, on the other hand, relied on the judgment of the Hon'ble High Court of Bombay in United Spirits Ltd. Vs. CC(Import), Mumbai, which supported the application of the principle of unjust enrichment to refunds arising from the finalization of provisional assessments.

Upon examining the case records and rival submissions, the Tribunal noted that the Commissioner (Appeals) had rejected the appellant's claim based on the judgment of the Hon'ble High Court of Bombay in Bussa Overseas and Properties Pvt. Ltd. Vs. UOI. The Tribunal also referred to the Hon'ble High Court of Bombay's decision in United Spirits Ltd., which considered the pertinent ratio in the Supreme Court judgments of Allied Photographics India Ltd. and Mafatlal Industries Ltd. The Tribunal upheld the impugned order, concluding that all claims for refund must meet the test of unjust enrichment.

2. Refunds for Units Suffering Loss:

The appellant argued that the principle of unjust enrichment should not apply to units that suffered a loss and did not pass on the duty to customers. They relied on decisions such as Superintending Engineers, TNEB Vs. CCE and Shakun Overseas Ltd. & another Vs. CCE, where it was held that units suffering losses had not passed on the duty to customers.

However, the Tribunal found that the facts of the cases relied on by the appellant were distinguishable from the present case. In Superintending Engineer, TNEB case, the assessee had shown that the duty paid on raw naphtha was not factored into the tariff for electricity, and the tariff remained constant. In Shakun Overseas Ltd., the appellants established with financial records that they had not passed on the duty.

Based on these findings, the Tribunal sustained the impugned order and rejected the appeals, concluding that the principle of unjust enrichment applied to the refunds claimed by MRPL and that the appellant had not sufficiently demonstrated that the duty had not been passed on to customers.

Conclusion:

The Tribunal upheld the impugned order, affirming that the principle of unjust enrichment applies to refunds arising from the finalization of provisional assessments, and rejected the appeals filed by MRPL. The Tribunal also dismissed the argument that the principle of unjust enrichment should not apply to units suffering a loss, finding that the facts of the cited cases were not applicable to the present case.

← Previous Next →