2008 (9) TMI 71 - HC - Customs

Refunds arising out of finalization of Provisional Assessment u/s 18 - amendment to section 18 of the Customs Act, 1962 prescribed in the provisions of Section 27(2) w.e.f. 13.7.2006 - Applicability of principles of unjust enrichment to the cases of finalization of provisional assessment prior to the amendment held that principle of unjust enrichment is not applicable in such cases prior to 13.7.2006 excess duty paid should be refunded without any claim made by assessee

Issues Involved:
1. Applicability of the principle of unjust enrichment to refunds arising from finalization of provisional assessments under the Customs Act, 1962.
2. Interpretation of Section 18 and Section 27 of the Customs Act, 1962, particularly in light of amendments effective from 13.07.2006.
3. Whether the Tribunal was justified in allowing refunds without considering the principle of unjust enrichment.
4. The impact of Supreme Court and High Court precedents on the issue of unjust enrichment in the context of provisional assessments.

Issue-wise Detailed Analysis:

1. Applicability of the Principle of Unjust Enrichment:
The court examined whether the principle of unjust enrichment under Section 27 of the Customs Act, 1962, applies to refunds arising from the finalization of provisional assessments under Section 18 of the Act. The Tribunal had held that the principle of unjust enrichment does not apply to such refunds if the finalization of the provisional assessment occurred before the amendment to Section 18 effective from 13.07.2006. The court upheld this view, stating that the doctrine of unjust enrichment could not be invoked for refunds arising from provisional assessments finalized before the amendment.

2. Interpretation of Section 18 and Section 27 of the Customs Act, 1962:
The court analyzed the provisions of Section 18 and Section 27 of the Customs Act, 1962, particularly focusing on the amendments to Section 18 effective from 13.07.2006. It was noted that the amendment introduced sub-sections (3), (4), and (5) to Section 18, incorporating the principle of unjust enrichment explicitly. The court concluded that prior to this amendment, Section 18 did not contain provisions that would allow the application of the principle of unjust enrichment to refunds arising from provisional assessments.

3. Justification of the Tribunal's Decision:
The Tribunal had allowed the refund claims on the ground that the finalization of the provisional assessments occurred before the amendment of Section 18 and, therefore, the principle of unjust enrichment was not applicable. The court supported this decision, noting that the law, as it stood before the amendment, did not provide for the application of the principle of unjust enrichment to such refunds. The court emphasized that the Tribunal's reliance on the Supreme Court's decision in Allied Photographic India Ltd. was appropriate and that the principle of unjust enrichment could not be applied retrospectively.

4. Impact of Precedents:
The court referred to several Supreme Court and High Court decisions, including Mafatlal Industries Ltd., Allied Photographic India Ltd., and TVS Suzuki Ltd., to support its conclusion. It was highlighted that the Supreme Court had consistently distinguished between the making of a refund and the claiming of a refund, and that the principle of unjust enrichment did not apply to refunds arising from the finalization of provisional assessments unless explicitly provided by law. The court also noted that the Mumbai High Court's decision in Bussa Overseas & Properties Pvt. Ltd., which had been affirmed by the Supreme Court, could not be considered authoritative as it did not align with the later decision in Allied Photographic India Ltd.

Conclusion:
The court dismissed the appeals filed by the Revenue, holding that the principle of unjust enrichment under Section 27 of the Customs Act, 1962, could not be read into the provisions of Section 18 of the Act without considering the amendment effective from 13.07.2006. The court emphasized that the law as it stood prior to the amendment did not permit the application of the principle of unjust enrichment to refunds arising from the finalization of provisional assessments. The appeals were dismissed with no order as to costs, and the related civil application was rejected as infructuous.

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