2011 (4) TMI 828 - AT - Customs

Refund claim - Provisional assessment - unjust enrichment - Held that - A plain reading of sub section 1 of Section 27 will make it clear that it is the responsibility of the appellant to submit proper documentary evidence and claim the refund - Section 18(5) of Customs Act inserted by Taxation Laws (Amendment) Act w.e.f. 13.7.06, provides that if any amount is found to be refundable after finalisation of provisional assessment, such refund will be subject to doctrine of unjust enrichment - Bussa Overseas Vs. UOI 2003 (9) TMI 90 - HIGH COURT OF JUDICATURE AT BOMBAY wherin held that even in case of customs, refund after provisional assessment is subject to provision of unjust enrichment - Decided against the assessee

Summary

Issues:
Refund claim for excess customs duty, unjust enrichment, admissibility of refund claim based on circular, burden of proof on the appellant, applicability of doctrine of unjust enrichment, relevance of financial records in claiming refund.

Analysis:
The case involved a refund claim by M/s. Atlantic Shipping Pvt. Ltd. for excess customs duty provisionally assessed during the coastal conversion of a vessel for bunkers. The original adjudicating authority sanctioned the refund but directed the amount to be credited to the consumer welfare fund, leading to an appeal by the appellant to the Commissioner (Appeals) and subsequently to the Tribunal.

The Commissioner (Appeals) rejected the appeal primarily due to the lack of financial records supporting the claim of unjust enrichment. The appellant failed to provide material evidence, such as balance sheets or audited financial documents, to demonstrate that the duty incidence was not passed on to clients. The appellant's reliance on Circular No.58/97 was deemed insufficient to override statutory obligations under Section 27 of the Act.

The Tribunal emphasized that the responsibility to provide proper documentary evidence for a refund claim lies with the appellant. The judgment cited the case law highlighting that a refund can only be granted if the duty component was not passed on to customers and was borne by the assessee. The appellant's failure to produce essential financial records and evidence led to the rejection of their appeal.

The doctrine of unjust enrichment was deemed applicable even in cases of provisional assessment, as per Section 18(5) of the Customs Act. The Tribunal referred to previous judgments emphasizing that refunds after provisional assessment are subject to the doctrine of unjust enrichment. The case law highlighted the distinction between duty payment and deposit, reinforcing the importance of proving non-passing of duty incidence for a refund claim.

Ultimately, the Tribunal upheld the original adjudicating authority's decision to credit the refund amount to the consumer welfare fund, as supported by the Commissioner (Appeals). The appellant's contentions were found lacking both factually and legally, leading to the rejection of their appeal.

In conclusion, the judgment reaffirmed the significance of providing substantial evidence and meeting statutory obligations to support refund claims, especially in cases involving the doctrine of unjust enrichment. The decision highlighted the importance of financial records and burden of proof on the appellant in claiming refunds under the Customs Act.