2011 (3) TMI 937 - AT - Customs

Refund claim - unjust enrichment - Amount of duty excess paid at the time of assessment of bills of entry - period involved in the appeal is of 1998 - According to the Hon ble High Court came to a conclusion that when provisional assessment is finalized the assessee is entitled to refund and the provisions of Section 27 are not attracted prior to the amendment of Section 18 - As such it has to be held that unjust enrichment was not applicable in respect of the refund arising out of the finalization of provisional assessment prior to 13.07.06 - Accordingly set aside the impugned orders and allow the appeal with consequential relief to the appellant.

Summary

Issues:
Claim for refund due to excess duty paid, compliance with doctrine of unjust enrichment, applicability of Section 27 of the Customs Act, 1962, challenge against order of original adjudicating authority, interpretation of Section 18 of the Customs Act, 1998.

Analysis:
1. The appellant filed a claim for refund of excess duty paid on imported Cranes due to a dispute in classification, which was accepted by CESTAT. However, a deficiency memo was issued as the burden of duty passing on was not proven. Subsequently, a show cause notice was issued for non-compliance with the doctrine of unjust enrichment under Section 27(1) of the Customs Act, 1962, leading to the refund being credited to the Consumer Welfare Fund by the original adjudicating authority.

2. The appellant challenged the order before the Commissioner (Appeals), arguing that as the cranes were used for hiring purposes and not sold or used in manufacturing, the duty payment was irrelevant for unjust enrichment. The Commissioner (Appeals) upheld the original order, leading to the present appeal by the appellant.

3. The Appellate Tribunal noted that the provisional assessment of the goods in 1998 was finalized later, and duty was paid accordingly. The Tribunal referred to the amendment of Section 18 of the Customs Act in 2006, which introduced provisions for unjust enrichment. Citing precedents, including a decision by the Gujarat High Court and a Larger Bench of the Tribunal, it was established that unjust enrichment did not apply to refunds arising from finalizing provisional assessments before the amendment in 2006.

4. Considering the period of the case and the legal precedents, the Tribunal concluded that unjust enrichment was not applicable to the refund in question. Therefore, the impugned orders were set aside, and the appeal was allowed in favor of the appellant with consequential relief.