2016 (9) TMI 725 - AT - Customs

Refund of the amount paid as pre-deposit pending investigation along with interest - sanction of refund claim but credited to consumer welfare fund - import of branded Car, Ferrari 599-GTB - denial of benefit of Sr. No. 344(2) of the Notification No. 21/2012 dated 1/3/2002 - seizure of car - voluntary payment of customs duty with interest by subsequent buyer - later on demand of duty and interest set aside - is the refund amount rightly credited to the consumer welfare fund? - whether the provision of unjust enrichment is applicable or otherwise? - Held that - In the Section 27 clause(b) provisions of unjust enrichment is not applicable in case where duty and interest, if any, paid on such duty on imports made by an individual for his personal use. The issue raised by the appellant that though duty for which refund was sought for paid by the subsequent buyer of the car Shri. Sanjay Sunil Dutt, appellant is entitle for refund, we are of the view that irrespective whether duty was paid by a person other than the importer but in connection with the import made by the appellant, it has to be considered that duty was paid by the appellant only therefore only for the reason duty was paid by the Shri. Sanjay Sunil Dutt refund cannot be denied. It is also observed that appellant has not produced sufficient documents to establish whether the incidence of refund amount has not been passed on to any other person or otherwise. Therefore in the interest of justice one more opportunity can be given to the appellant to prove whether the incidence of duty for which the refund is sought for, has not been passed to any other person - matter remanded to original authority for limited purpose of verifying the factual aspect whether the incidence of duty has not been passed on to any other person or otherwise - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of pre-deposit amount, applicability of unjust enrichment, refund claim by the importer, duty payment by subsequent buyer, direction for refund by Tribunal.

Analysis:
The appeal challenged the Order-in-Original dated 24/11/2014, where the benefit of a specific notification was denied to the appellant due to an old car being imported. The subsequent owner voluntarily paid the duty and interest. The Tribunal set aside the original order, directing a refund. The appellant sought a refund of the amount paid as a pre-deposit, claiming unjust enrichment does not apply. The appellant argued that as the import was for personal use, unjust enrichment should not be considered. The Revenue contended that unjust enrichment applies, citing relevant case law. The Tribunal noted the duty payment during import required unjust enrichment scrutiny, despite being a pre-deposit. The car was sold immediately after import, not for personal use, making unjust enrichment applicable. The Tribunal remanded the case to verify if the duty incidence was passed on, granting the appellant an opportunity to prove so. The adjudicating authority was directed to issue a fresh order within three months.

This case highlighted the contentious issue of unjust enrichment in refund claims related to duty payments. The Tribunal emphasized that even pre-deposits must undergo the unjust enrichment test, as per the Customs Act. The decision rested on whether the duty incidence was passed on, with the appellant given a chance to establish this. The judgment underscored the importance of thorough verification in such cases, ensuring a just outcome.