2014 (2) TMI 972 - AT - Customs

Denial of refund claim of Interest - Unjust enrichment - Denial on basis of Previous order of Commissioner (Appeals) - Held that - appellant s refunds of interest, paid as per the provision of Sec. 61(2) of the Customs Act, 1962, will not be hit by the doctrine of unjust enrichment. - decision in the case of Ashok Leyland Vs. Commissioner 2001 (3) TMI 786 - CEGAT, CHENNAI and J.K. Synthetics Ltd. v. CC, Jaipur 1997 (7) TMI 414 - CEGAT, NEW DELHI followed. - Decided in favor of assessee.

Summary

Issues:
- Applicability of unjust enrichment in refund claim of interest
- Interpretation of previous orders by the appellate authority
- Legal principles governing refund of interest under Sec. 61(2) of the Customs Act, 1962

Analysis:
1. Applicability of Unjust Enrichment: The appellant contested the application of unjust enrichment to the refund claim of interest. The advocate cited various case laws to support this argument. The first appellate authority had initially held that the issue of unjust enrichment had been decided in a previous order. However, upon closer examination, it was revealed that the previous order did not conclusively determine the applicability of unjust enrichment. The appellate authority had actually remanded the matter to the adjudicating authority for further verification. The subsequent decision reaffirmed that the doctrine of unjust enrichment does not apply to refunds of interest under Sec. 61(2) of the Customs Act, 1962.

2. Interpretation of Previous Orders: The appellate tribunal carefully analyzed the previous orders and observed that the initial decision did not definitively settle the issue of unjust enrichment. The tribunal highlighted that the circular issued by CBEC clarified that the provisions of Sec. 27 of the Customs Act, 1962 do not apply to the refund of interest under Sec. 61(2). This interpretation was supported by case law precedent, including a decision by the Supreme Court. The tribunal also referenced a similar judgment in the case of Ashok Leyland, which had been upheld by the Supreme Court, further reinforcing the position that unjust enrichment does not apply to interest refunds under the Customs Act.

3. Legal Principles Governing Refund of Interest: The tribunal ultimately concluded that the appellant's refund claim for interest, made under Sec. 61(2) of the Customs Act, 1962, was not subject to the doctrine of unjust enrichment. Citing the legal principles established through circulars, case law, and previous judgments, the tribunal allowed the appeal filed by the appellant. The decision emphasized that the refunds of interest, paid in accordance with the Customs Act provisions, should not be affected by unjust enrichment principles. The operative part of the order pronounced in court reflected the allowance of the appellant's appeal based on this legal interpretation.