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2014 (5) TMI 55 - AT - CustomsApplicability of unjust enrichment principle prior to 13.07.2006 amendment - Claim of refund - Pre-deposit - Finalization of provisional assessment - Held that - It is not disputed that the excess amount paid by the assessee consequent to finalization of provisional assessment was required to be suo moto refunded prior to 1-8-1998 - Relying upon COMMISSIONER OF CUSTOMS Versus Hindalco Industries Ltd. 2008 (9) TMI 71 - HIGH COURT GUJARAT - Principle of unjust enrichment is not applicable in such cases prior to 13.7.2006 Excess duty paid should be refunded without any claim made by assesse - The period involved in the dispute pertains to the period 1998-99 - As the disputed period is prior to amendment of Section 18 i.e. before 14.07.2006 and the assessment being provisional, the provisions of unjust enrichment are not applicable Therefore, the rejection of claim of ₹ 17.50 Lakhs by the lower authority is not sustainable. Commissioner (A) has recorded that amount deposited prior to adjudication of demand case did not remain pre-deposit as the said deposit stood adjusted against the duty confirmed in the demand order and deposit converted into duty, hence unjust enrichment is applicable - Finding of the Commissioner (A) is not convincing for the reason that even though the deposit made before adjudication of demand and it got appropriated against a demand of duty, if there is a contest to the said demand in form of appeal, the nature of deposit remained as a pre-deposit stood maintained - On setting aside the demand order by Tribunal, the action of appropriation of amount of deposit in duty and the whole order become non existent and such order cannot be of any help for the revenue to treat the amount deposited as a duty - Even if at one stage deposit made by the appellant is appropriated as duty but on setting aside the demand itself the appropriation also become null & void - Therefore, the doctrine of unjust enrichment to such a refund claim is not applicable - Assessees are entitled for the refund in question and impugned order is set aside Decided in favour of assesses.
Issues Involved:
1. Provisional Assessment and Differential Duty 2. Unjust Enrichment and Refund Claims 3. Nature of Deposits and Pre-deposits Issue-wise Detailed Analysis: 1. Provisional Assessment and Differential Duty: The appellant imported goods in 1998 and 1999, which were provisionally assessed by Customs. The goods were detained due to low declared prices, and inquiries were made to ascertain contemporaneous import prices. The appellant paid differential duties and provided bank guarantees for the provisional release of the goods. After necessary inquiries, a Show Cause Notice was issued, and the Commissioner of Customs adjudicated the case, confirming differential customs duties. The amounts already deposited were appropriated towards the recovery of the differential duties. The appellant's appeal to the Tribunal resulted in a favorable order, leading to the filing of a refund claim. 2. Unjust Enrichment and Refund Claims: The appellant's refund claim of Rs. 43.50 lakhs was sanctioned but credited to the Consumer Welfare Fund on the grounds of unjust enrichment. The appellant contended that the amounts were pre-deposited during the pendency of proceedings and should not be subject to unjust enrichment provisions. The Commissioner (Appeals) partially allowed the refund, holding that Rs. 20 lakhs was a pre-deposit not hit by unjust enrichment, but denied the refund of Rs. 17.5 lakhs on the grounds that it was not shown as 'receivable' or 'deposit with Customs' during the relevant period. 3. Nature of Deposits and Pre-deposits: The appellant argued that the amounts were deposited 'Under Protest' during the provisional release of goods and should be considered pre-deposits, not duties. The Tribunal noted that Section 18 of the Customs Act, which deals with provisional assessments, did not include the clause of unjust enrichment until its amendment in 2006. The Tribunal cited the Supreme Court's decision in the T.V.S. Suzuki Ltd. case, which held that the principles of unjust enrichment are not applicable to refund claims pertaining to periods before the amendment. The Tribunal also referenced the case of Scientific Instruments Co. Ltd., which supported the view that unjust enrichment provisions are not applicable to refunds arising from provisional assessments finalized before the amendment. Conclusion: The Tribunal concluded that the rejection of the refund claim of Rs. 17.5 lakhs was not sustainable, as the period involved was prior to the amendment of Section 18 of the Customs Act. The Tribunal further held that the nature of the deposit remained as a pre-deposit, even if it was appropriated against a demand, and that the doctrine of unjust enrichment did not apply. The appeal was allowed with consequential relief, and the impugned order was set aside. Pronouncement: The judgment was pronounced in court on 11.04.2014.
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