2014 (2) TMI 67 - AT - Customs

Unjust enrichment - Section 27(2) of the Customs Act, 1962 - Consumer Welfare Fund - Benefit under Project imports - Refund claim filed for refund of 2% security deposit - Circular No.89/95-Cus dated 09/08/1995 - Held that - appellant has proved that he has not passed on the incidence of duty, refund was granted. In the said judgment there was no conclusion to say that pre-deposit of amounts would be construed as duty. In fact the Tribunal did not go into the question at all. In the case before us, the payment of cash security was made in terms of the Board s circular cited supra and the circular makes it abundantly clear that it is only a cash security and not any other payment. If that be so, the provisions of Section 27(2) which applies to duty and interest thereon, does not apply to cash securities made. Therefore, the question of providing unjust enrichment would not arise in the case of refund of cash securities - Following decision of IDMC Ltd. vs. CC, Mumbai 2013 (2) TMI 257 - CESTAT MUMBAI - Decided in favour of assessee.

Summary

Issues:
- Appeal against the order passed by the Commissioner (Appeals) regarding the rejection of a refund claim for a security deposit made under Project Import Regulations, 1986.
- Applicability of unjust enrichment provisions to the security deposit.
- Interpretation of the Board's circular dated 9.8.1995 regarding cash security for imported goods under Project Import.

Analysis:
1. The appeal was filed challenging the rejection of a refund claim for a security deposit made under Project Import Regulations, 1986. The appellants imported raw materials, components, consumables, etc., and were directed to make a security deposit by the Revenue authorities. After finalizing the assessment and paying the appropriate duty, the appellants applied for a refund of the security deposit, which was rejected on the grounds of unjust enrichment, as the burden of duty passing on to others was not proven by the appellants.

2. The appellants argued that unjust enrichment provisions do not apply to the security deposit and relied on Section 27 of the Customs Act. They cited previous decisions where it was held that cash security made under Board's Circular for registration under Project Import Regulations is not subject to unjust enrichment provisions. The Revenue supported the findings of the lower authority.

3. The Tribunal examined the Board's circular dated 9.8.1995, which specified the requirements for cash security for imported goods under Project Import. The circular stated that cash security equivalent to 2% of the CIF value of goods would be taken instead of 5%, with the balance covered by a bank guarantee. The tribunal noted that the assessment was finalized, and the amount in question was shown as recoverable as per the Chartered Accountant's certificate.

4. Referring to a previous decision in the case of IDMC Ltd., the tribunal concluded that the cash security made as per the Board's circular is not subject to Section 27(2) of the Customs Act, which applies to duty and interest. Therefore, unjust enrichment provisions do not apply to cash securities made under the circular. The tribunal set aside the impugned order and allowed the appeal based on the precedent established in the IDMC Ltd. case.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision regarding the refund claim for a security deposit under Project Import Regulations.