2014 (5) TMI 600 - HC - Customs

Refund claim - Provisional assessment - Unjust enrichment - Does the principle of unjust enrichment not apply to the refund claimed in a provisional assessment - Held that - revenue cannot dispute that there was an excess payment. The second aspect of the matter is the claim arose out of and was prior to 13.07.2006. On that date there was an amendment making the provisional assessment subject to the principle of unjust enrichment. The Gujarat High Court in the judgment reported as Commissioner of Customs vs. Hindalco Industries Ltd., 2008 (9) TMI 372 - HIGH COURT OF GUJARAT AT AHMEDABAD held that the insertion of the specific condition vis-a-vis non- existence of unjust enrichment was a prospective one and was not clarificatory as was sought to be urged by the revenue. That decision is a subject matter of a special leave petition. This Court concurs with the view of the Gujarat High Court, more so since in the present case the importation took place earlier and we note that the claim of refund was not subjected to the condition which was brought in by way of amendment for the first time on 13.07.2006. In view of the discussion no substantial question of law arises for consideration - Decided against Revenue.

Summary

Issues:
- Application of principle of unjust enrichment to refund claimed in provisional assessment.

Analysis:
The main issue in this judgment revolves around the application of the principle of unjust enrichment to a refund claimed in a provisional assessment. The case involves the rejection of a refund claim by the Assistant Commissioner, which was later upheld by the Commissioner (Appeal) but overturned by the CESTAT. The revenue contended that the impugned order was flawed due to the principle of unjust enrichment. The Tribunal, however, observed that prior to the amendment of Section 18 of the Customs Act in 2006, the principle of unjust enrichment did not apply to refund claims arising from finalization of provisional assessments. The Tribunal relied on judgments of the Gujarat High Court and the Delhi High Court to support this position. The Tribunal held that since the refund claim in this case arose before the 2006 amendment, the principle of unjust enrichment did not apply, and the appeal was allowed.

Another crucial aspect of the judgment is the retrospective application of the amendment to Section 18 of the Customs Act in 2006. The Gujarat High Court had previously held that the insertion of the condition regarding unjust enrichment was prospective and not clarificatory. The High Court in this case concurred with the view that the amendment did not apply retrospectively to refund claims arising before its enactment. The Court noted that the importation in question occurred prior to the 2006 amendment, and the refund claim was not subject to the new condition introduced by the amendment. Consequently, the Court dismissed the appeal, stating that no substantial question of law arose for consideration in this matter.

In conclusion, the judgment clarifies the application of the principle of unjust enrichment to refund claims in provisional assessments, particularly concerning the timing of the claim in relation to the relevant statutory amendments. The decision provides a nuanced interpretation of the law in this area, emphasizing the importance of considering the legislative timeline and the specific circumstances of each case when determining the applicability of legal principles.