2016 (1) TMI 877 - AT - Customs

Claim of Refund of duty paid after finalization of provisional assessment - unjust enrichment - import of Automatic Exhaust Emission Analysis System - claim of benefit of Notification 243/78-Cus for basic duty and additional duty and Notification 23/91-Cus and Notification 70/90-CE for benefit of auxiliary duty. - Held that - the doctrine of unjust enrichment will not be applicable as the present refund claim relates to the period prior to amendment in Section 18 of the Customs Act, 1962 i.e. 14.07.2006. - Decided in favor of assessee.

Summary

Issues involved:
Appeal against order of Commissioner (Appeals) setting aside Adjudicating Authority's decision to credit refund to Consumer Welfare Fund - Application of unjust enrichment clause to refund arising from finalization of provisional assessment - Interpretation of Section 18 of Customs Act, 1962 pre and post amendment - Relevance of case laws in determining applicability of unjust enrichment - Doctrine of unjust enrichment in refund cases.

Analysis:
1. The appeal was filed by the department against the Commissioner (Appeals) order setting aside the Adjudicating Authority's decision to credit the refund to the Consumer Welfare Fund. The case involved the classification of imported goods and the denial of benefits under various notifications. The issue revolved around the doctrine of unjust enrichment and whether the incidence of duty was passed on to consumers.

2. The department argued that the Order-in-Appeal was unsustainable as it did not consider binding precedents and amendments in Rule 9B of Central Excise Rules, making all refund cases subject to the unjust enrichment clause. The department relied on the Bombay High Court judgment in Bussa Overseas & Properties P. Ltd. and other case laws to support their contention that the unjust enrichment clause applies to refund cases arising from finalization of provisional assessment.

3. On the other hand, the respondent's counsel contended that the amendment to Section 18 of the Customs Act, 1962, specifically addressing unjust enrichment in refunds, was effective from 14.07.2006. Therefore, refund claims prior to this date were not subject to the unjust enrichment clause. The counsel cited various judgments to support this argument, emphasizing that the doctrine of unjust enrichment did not apply to provisional assessments finalized before the amendment.

4. The Tribunal considered the conflicting interpretations of the law and the relevance of case laws in determining the applicability of the unjust enrichment doctrine. It noted that the doctrine would not apply to the present case as the refund claim related to a period before the Section 18 amendment. The Tribunal relied on the Oriental Exports case upheld by the Supreme Court, which established that the unjust enrichment clause did not apply to refund claims finalized before the amendment.

5. Ultimately, the Tribunal found no valid grounds to interfere with the Commissioner's order in favor of the respondent. Citing the relevant judgments and the application of the law pre and post amendment, the appeal filed by the department was rejected, affirming the Commissioner's decision in favor of the respondent.