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2009 (2) TMI 100 - AT - CustomsApplicability of principle of unjust enrichment on refund arising due to finalization of provisional assessment for period prior to 13.7.06 - Section 27 and Section 18 was amended only in 2006 Section 18 amended w.e.f. 13.7.06 - contention of revenue that such amendment has to be understood as clarificatory in nature, is not acceptable - HC in Hindalco case considered this issue in detail and concluded that when provisional assessment is finalized, the assessee is entitled to refund and he does not have to make the claim. Therefore, the provisions of Section 27 is not attracted in view of this decision, reference is answered in favour of assessee
Issues Involved:
1. Whether the refund of customs duty arising out of the finalization of provisional assessment, in terms of Section 18 of the Customs Act, for the period prior to 13-7-2006, attracts the provisions of unjust enrichment. Issue-Wise Detailed Analysis: 1. Background of the Case: M/s. Hindustan Zinc Ltd. was entitled to a refund of Rs. 14,37,016/- upon the finalization of provisional assessment of Bill of Entry for imported goods. The refund was credited to the Consumers Welfare Fund as the appellant could not establish that the duty liability had not been passed on to the buyers, as required under Section 27 of the Customs Act, 1962. The Commissioner (Appeals) allowed the appeal, relying on precedents such as Tecil Chemicals and Hydro Power Ltd. v. CCE, Cochin, and Oriental Exports v. Commr. of Customs New Delhi, as well as the Supreme Court decision in Mafatlal Industries case. The Revenue appealed this decision, leading to the matter being referred to the Larger Bench. 2. Arguments by the Appellant: The appellant argued that the decision of the Hon'ble Gujarat High Court in Hindalco Industries case should not be relied upon as it did not discuss the Bombay High Court's decision in Bussa Overseas case. The appellant contended that: - The cases relied upon by the Gujarat High Court related to Central Excise, not Customs. - The unamended provisions of Section 11B and Rule 9B were examined before amendments that introduced relevant dates for provisional assessment cases. - The differentiation between "making of refund" and "claiming of refund" as established in Mafatlal case should be considered. - Amendments to Section 11B and Rule 9B should be seen as clarificatory, and the only remedy for refund should be to challenge the assessment order. - The doctrine of unjust enrichment should apply universally, as supported by the Supreme Court in Sahakari Khand Udyog Mandal Ltd. v. CCE. 3. Arguments by the Respondent: The respondent argued that: - Prior to its amendment in 1991, Section 11B of the Central Excise Act had provisions for provisional assessment, and the Supreme Court in Allied Photographics India Ltd. case distinguished between making a refund and claiming a refund. - The Gujarat High Court's decision in Hindalco Industries was correct and should be followed. - The Supreme Court consistently upheld the distinction between automatic adjustment of duty and refund claims. - The Larger Bench should follow the decision of the Gujarat High Court, as it is binding within its jurisdiction. 4. Tribunal's Analysis: The Tribunal examined the relevant provisions under Central Excise and Customs: - Prior to 1991, Section 11B did not have provisions for unjust enrichment and provided a relevant date for provisional assessment cases. - Rule 9B provided for automatic adjustment of provisionally assessed duty, distinguishing it from refund claims under Section 11B. - The Supreme Court's decisions in Mafatlal Industries, Allied Photographics, and Sahakari Khand Udyog Mandal were related to periods before 1998. The Tribunal noted that the Gujarat High Court in Hindalco Industries had analyzed the provisions of Sections 18 and 27 of the Customs Act in detail, concluding that amendments to Section 18 in 2006 were not clarificatory and did not apply retrospectively. Therefore, refunds arising from the finalization of provisional assessments before 13-7-2006 did not attract the provisions of unjust enrichment. 5. Conclusion: The Tribunal concluded that prior to 13-7-2006, refunds due upon final assessment were to be made without the need for a claim by the assessee and did not attract the provisions of unjust enrichment. The reference made by the Division Bench was answered in favor of the respondent. 6. Final Disposal: The reference was answered, and the records were placed before the regular Bench for the final disposal of the appeal.
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