2016 (1) TMI 420 - AT - Customs

Claim of refund of excess interest paid on demand of duty due to shortfall in export obligation - unjust enrichment - Held that - the appellant had filed C.A. certificate before the lower authority to the effect that the amount of excess paid interest have not been passed on and the same stands recoverable in the Books of Account of the appellant. Further, the appellant have produced a copy of Balance sheet along with certificate of C.A. certifying the amount has been shown as recoverable on the Asset side under the head Deposit and Others and as such the only thing, being audited in Balance sheet, for which the lower authority did not accept the claim is erroneous, as unjust enrichment is not attracted. The payment of excess interest was due to clerical error or due to mistake as to rate of interest applicable, the unjust enrichment is not attracted as the excess payment made is in the nature of deposit. - refund allowed - Decided in favor of assessee.

Summary

Issues Involved:
Refund of excess interest paid by mistake, application of wrong rates in interest calculation, reliance on tribunal rulings, production of authenticated documents, unjust enrichment provision, ongoing dispute affecting balance sheet finalization, reliance on Chartered Accountant certificates, applicability of unjust enrichment provision, production of audited balance sheet, reliance on tribunal rulings regarding arithmetical errors in duty payment, disbursement of refund.

Analysis:
The appellant imported capital goods against an EPCG License but failed to meet the export obligation, resulting in a directive to pay customs duty with interest. Due to a calculation error, the appellant paid excess interest, leading to a refund claim. The Commissioner (Appeals) upheld the original order citing the application of wrong interest rates and lack of authenticated documents. The appellant's reliance on tribunal rulings and the absence of simple arithmetical error were noted. The appellant's failure to produce audited documents further complicated the case.

The appellant, facing an ongoing dispute affecting balance sheet finalization, presented a Company Law Board order and an audited balance sheet showing the recoverable amount. Chartered Accountant certificates were submitted to support the claim. The appellant argued that excess interest payment does not constitute duty, thus unjust enrichment does not apply. The learned Counsel emphasized the need for refund based on settled law.

The learned AR supported the impugned order, arguing that the interest rate was correctly paid at 24%. Reference was made to tribunal rulings and the Madras High Court decision regarding the acceptance of Chartered Accountant certificates. The appellant countered with a tribunal ruling stating that arithmetical errors do not constitute duty, supporting the refund claim.

After evaluating the contentions, the Tribunal found in favor of the appellant. The appellant's submission of the C.A. certificate and audited balance sheet demonstrated the non-passing on of excess interest, justifying the refund claim. The Tribunal concluded that unjust enrichment did not apply due to the deposit nature of the excess payment. The rulings cited by the Revenue were deemed inapplicable, and the appellant was granted a refund of the excess amount. The adjudicating authority was directed to disburse the refund promptly.

In conclusion, the Tribunal allowed the appeal, emphasizing the appellant's compliance with unjust enrichment provisions and the nature of the excess payment as a deposit. The detailed evidence presented by the appellant, including the audited balance sheet and C.A. certificates, supported the refund entitlement, leading to a favorable judgment.