2013 (5) TMI 172 - AT - Customs

Unjust enrichment on refund arising due to finalization of provisional assessment - Apellant and the foreign company is having a technical assistance agreement - Bills of entry in question were assessed provisionally by taking extra duty deposit of 1% of the duty payable - Appellant submitted the relevant documents to SVB who accepted the invoice values in respect of goods imported. Therefore, appellant claimed refund of extra duty deposit made earlier. Held that - In the present case while the 1% extra duty had been paid during 2001-2002 to 2003-2004, the refund claim of this extra duty deposit had arisen on 20.01.2004 when the Assistant Commissioner passed the order accepting the declared transaction value and the refund claim had been filed within one year. Therefore, following the judgment of Commissioner of Customs, Kandla Vs. Hindustan Zinc Ltd. 2009 (2) TMI 100 principles of unjust enrichment are not applicable to this refund claim. Since this is the only ground on which the rejection of the refund claim has been upheld. Thus, the impugned order is not sustainable and set aside. Appeal is allowed.

Issues:
1. Whether the principle of unjust enrichment is applicable to the refund claim?
2. Whether the appellant has discharged the burden of proof regarding the duty refund?
3. Whether the assessments were provisional during the period of dispute?
4. Whether the rejection of the refund claim is sustainable?

Analysis:

Issue 1: Principle of Unjust Enrichment
The appellant contended that the assessments during the period in question were provisional and the refund claim arose upon finalization of the provisional assessment. The Tribunal examined the relevant provisions of the Customs Act, noting that prior to the amendment in 2006, the principle of unjust enrichment did not apply to refund claims arising from finalization of provisional assessments. Citing precedents from the Gujarat and Delhi High Courts, the Tribunal held that in this case, the principle of unjust enrichment was not applicable. As the refund claim was filed within the prescribed time limit, the rejection of the claim on the grounds of unjust enrichment was deemed unsustainable.

Issue 2: Burden of Proof
The appellant submitted a Chartered Accountant's Certificate asserting that the excess duty paid was not passed on to customers. They argued that the burden of proving otherwise lay with the Department. The Tribunal noted that the appellant had not increased the price of the final product during the period in question, indicating that the duty had not been recovered from customers. Additionally, the absence of the duty payment in the balance sheet for 2003-2004 did not conclusively prove passing on to customers. Ultimately, the Tribunal found in favor of the appellant on this issue.

Issue 3: Provisional Assessments
The Tribunal reviewed the facts of the case, including the agreements between the appellant and the foreign company, establishing the related status of the parties. It was observed that the assessments were provisional during the period under dispute, as evidenced by the Assistant Commissioner's order accepting the declared assessable value. Consequently, the refund claim was deemed to have arisen upon finalization of the assessments.

Issue 4: Sustainability of Rejection
The Departmental Representative argued that the refund claim was subject to the doctrine of unjust enrichment due to the excess duty payment. However, the Tribunal's analysis, as discussed in the previous issues, highlighted the inapplicability of unjust enrichment in this case. As the rejection of the refund claim was primarily based on unjust enrichment, the Tribunal concluded that the rejection was not sustainable and set it aside, allowing the appeal.

Overall, the Tribunal's decision favored the appellant, emphasizing the specific circumstances of the case, the legal framework regarding provisional assessments, and the absence of evidence supporting the Department's position on unjust enrichment.

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