2016 (5) TMI 177 - AT - Customs

Refund - Order passed beyond the scope of show cause notice and decided the appeal on altogether different ground of admissibility of refund whereas the the appeal was on the bar of unjust enrichment - Adjudicating authority has already sanctioned the refund but credited into Consumer Welfare Fund applying the provisions of unjust enrichment. Held that - the refund is in respect of revenue deposit made by the appellant for provisional assessment of imports in terms of Section 18 of the Customs Act, 1962. It is clear that at the time of provisional assessment the bar of unjust enrichment in case of a refund arising on finalization of the assessment was not applicable. Therefore, the lower authority has wrongly credited the sanctioned refund in the Consumer Welfare Fund. As per the decision of Hon ble Supreme Court in the case of Mafatlal Industries Ltd. Vs. Union of India 1996 (12) TMI 50 - SUPREME COURT OF INDIA , the bar of unjust enrichment is not applicable in case of provisional assessment. Therefore, the impugned order is not sustainable and set aside. - Decided in favour of appellant

Summary

Issues:
1. Appeal against Order-in-Appeal rejecting appellant's refund claim.
2. Application of the doctrine of unjust enrichment in the case.
3. Interpretation of Section 18 of the Customs Act, 1962 regarding provisional assessment and refund.

Detailed Analysis:
1. The appeal was filed against the Order-in-Appeal rejecting the appellant's refund claim, which arose from the finalization of provisional assessment of imports. The Commissioner (Appeals) upheld the rejection based on the appellant not challenging the assessment order's finalization. The appellant contended that the refund was sanctioned but credited to the Consumer Welfare Fund on unjust enrichment grounds. The appellant argued that during the relevant period, the bar of unjust enrichment did not apply to refunds from provisional assessments. Citing relevant judgments and Circulars, the appellant emphasized that the doctrine of unjust enrichment should not be applied in such cases.

2. The issue of unjust enrichment was central to the case, as the Revenue argued that the refund was credited to the Consumer Welfare Fund based on this principle. However, the Tribunal noted that the bar of unjust enrichment was not applicable during the period of provisional assessment in question. The Tribunal referred to Section 18 of the Customs Act, 1962, which governs provisional assessment and refunds. The Tribunal highlighted that the bar of unjust enrichment was introduced later and did not apply to refunds arising from finalization of assessments during the relevant period. Citing legal precedents and Circulars, the Tribunal concluded that the lower authority erred in applying unjust enrichment to the refund and set aside the impugned order.

3. The Tribunal delved into the interpretation of Section 18 of the Customs Act, 1962, which deals with provisional assessment of duty and subsequent refunds. The Tribunal analyzed the provisions of Section 18(2) and the subsequent insertion of Sub-Section (5) regarding unjust enrichment. By referencing legal judgments and observations from the Hon'ble Supreme Court, the Tribunal clarified that the doctrine of unjust enrichment did not apply to refunds arising from provisional assessments. The Tribunal also pointed out that Circulars and past judgments supported this interpretation. Ultimately, the Tribunal allowed the appellant's appeal, emphasizing the inapplicability of unjust enrichment to the case of provisional assessment refunds.