2015 (11) TMI 1333 - AT - Customs

Denial of refund claim - Unjust enrichment - refund arising out of finalisation of provisional assessment - Held that - Even in the case of CC Vs. Hindalco Industries Ltd. (2008 (9) TMI 372 - HIGH COURT OF GUJARAT AT AHMEDABAD) the Gujarat High Court only stated that no provision existed in section 18 of the Customs Act,1962 which would permit Revenue to invoke principles of unjust enrichment in relation to duty paid in excess, found to be so, upon finalisation of provisional assessment under section 18 ibid. While that was certainly the case, (i.e., Section 18 ibid did not expressly contain provision regarding unjust enrichment) the invocation of doctrine of unjust enrichment does not require the crutches of any section of any act in the light of the fact that the said doctrine was required to be invoked in all cases involving refund of duty in the wake of the judgement of Hon ble Supreme Court in the case of Mafatlal Industries Ltd. Vs. Union of India (1996 (12) TMI 50 - SUPREME COURT OF INDIA) which laid down the principles of unjust enrichment as law of the land. - doctrine of unjust enrichment is applicable even in respect of raw materials to be consumed it, settled by Supreme Court in the case of Union of India Vs. Solar Pesticides Pvt. Ltd. (2000 (2) TMI 237 - SUPREME COURT OF INDIA ). It is not in dispute that the burden to establish that the burden of duty has not been passed on to any other person squarely rests on the appellant. That burden cannot be deemed to have been discharged merely by saying that the price of the final products reduced after the import of the impugned goods because the price of the final product does not depend solely on the price of the impugned goods - No infirmity in impugned order - Decided against the assessee.

Summary

Issues:
- Refund claim admissibility
- Doctrine of unjust enrichment
- Applicability of judicial pronouncements
- Burden of proof on the appellant
- Finalization of provisional assessment

Refund Claim Admissibility:
The appeal was filed against an Order-in-Appeal that denied the refund claim of the appellant and instead ordered a credit to the Consumer Welfare Fund due to the doctrine of unjust enrichment. The appellant contended that the provisional assessment was finalized before the amendment incorporating the doctrine of unjust enrichment, and the burden was not passed on to buyers. However, the Departmental Representative argued that the doctrine of unjust enrichment became applicable as per Supreme Court judgments, emphasizing the need to comply with relevant laws even after finalization of assessment.

Doctrine of Unjust Enrichment:
The Tribunal noted that the doctrine of unjust enrichment, established by the Supreme Court, became law of the land upon pronouncement. The judgments cited by the appellant, not from the Supreme Court, were deemed insufficient. The Tribunal emphasized that the doctrine applies even in cases of finalization of provisional assessment, as supported by relevant legal precedents. The burden to prove that duty burden was not passed on rested on the appellant, and mere reduction in final product prices post-import was not sufficient to discharge this burden.

Applicability of Judicial Pronouncements:
The Tribunal analyzed various judgments cited by both parties, emphasizing the significance of Supreme Court decisions in establishing legal principles. It clarified that the invocation of the doctrine of unjust enrichment did not require specific statutory provisions, as it was a legal requirement for all duty refund cases post the Supreme Court's pronouncement.

Burden of Proof on the Appellant:
The Tribunal highlighted that the burden of proof regarding passing on the duty burden to others lay with the appellant. Merely showing a reduction in final product prices post-import was not conclusive evidence, as various factors could influence price uniformity. The Tribunal cited Supreme Court observations to support this stance.

Finalization of Provisional Assessment:
The Tribunal dismissed the appeal, finding no fault in the impugned order. It upheld the applicability of the doctrine of unjust enrichment, emphasizing the need for the appellant to establish non-passing of duty burden convincingly. The decision was based on legal principles established by the Supreme Court and relevant judicial interpretations, affirming the dismissal of the appeal.