2019 (11) TMI 1497 - AT - Customs

Refund of excess Customs duty paid - goods not sold - rejection on the ground that the appellant has failed to pass the bar of unjust enrichment - HELD THAT - Admittedly, the passing of duty on the buyer comes into picture only when goods are sold. When the goods are not sold, the appellant is not required to establish that the duty incidence is not been passed on the buyer. As there is no buyer at all, in that circumstances, the Ld. Commissioner (Appeals) fell in an error holding that the appellant is required to pass the bar of unjust enrichment as held by the Hon ble Apex Court in the case of Mafat Lal Industries Ltd. v. Union of India 1996 (12) TMI 50 - SUPREME COURT . Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection based on unjust enrichment.

Analysis:
The appellant filed a refund claim after paying Basic Customs Duty (BCD) @ 5% during import, whereas the actual rate was 2%. The adjudicating authority initially allowed the refund claim, but it was rejected on appeal by the Revenue citing unjust enrichment. The main question was whether the bar of unjust enrichment applied when the goods were not sold by the appellant.

The Tribunal noted that the goods in question were not sold by the appellant, and therefore, the duty incidence on the buyer did not arise as the goods were still in the appellant's possession. The Tribunal referred to the case law of Mafat Lal Industries Ltd. v. Union of India [1997 (89) E.L.T. 247 (S.C.)] to support the position that unjust enrichment is not applicable when goods are not sold. The Ld. Commissioner (Appeals) erred in requiring the appellant to pass the bar of unjust enrichment in such circumstances.

Consequently, the Tribunal found no merit in the impugned order and set it aside. The appeal was allowed, and any consequential relief was granted to the appellant.