2016 (12) TMI 763 - AT - Customs

Unjust enrichment - whether the appellant is eligible for the refund of the amount or the said amount has been correctly credited to the Consumer Welfare Fund? - Held that - It can be seen from the adjudication order and the impugned order that appellant is eligible for the refund as claimed by them. The only question that falls for our consideration is whether appellant has crossed the hurdle of unjust enrichment or not. It is undisputed that appellant had shown the amount claimed as refund as receivables in Balance Sheet with a narration that this amount is due from Revenue Authorities. It is a common knowledge that when the amount is shown as receivables it is not expensed out in the Balance Sheet hence will not form a part of the cost of the final product manufactured. Since there is no dispute that the amount of refund sought was shown as receivables appellant has been able to prove that he has not recovered the same their customer we hold that the impugned order is unsustainable and liable to be set aside. The impugned order is set aside - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
1. Eligibility for refund of excess Customs Basic duty paid.
2. Question of unjust enrichment.

Analysis:
1. The appeal was filed against Order-in-Appeal No. PI/319/05 dated 31.08.2005 passed by the Commissioner of Central Excise (Appeals), Pune-I. The appellant, a manufacturer of 2/3 wheeler vehicles, filed a refund claim of &8377; 29,65,836.90 due to paying excess Customs Basic duty on CKD components of motorcycles imported from M/s Kawasaki Heavy Industries Ltd. Japan. The excess duty was paid at 25% + 25% Auxiliary duty, but the rate was later amended to 10%. The adjudicating authority sanctioned the refund but directed the amount to be credited to the Consumer Welfare Fund. The appellant contested this decision, leading to the appeal.

2. Both the first appellate authority and the departmental representative upheld the decision to credit the refund amount to the Consumer Welfare Fund. The appellant argued that the amount was shown as receivables in their Books of Account and Balance Sheet, indicating it was due from Revenue Authorities, thereby negating the unjust enrichment argument. The Tribunal found that since the amount claimed as refund was shown as receivables in the Balance Sheet, it was not expensed out and did not affect the cost of the final product manufactured. As the appellant demonstrated that the amount was not recovered from their customers, the Tribunal held that the impugned order was unsustainable. Consequently, the Tribunal set aside the Order-in-Appeal and allowed the appeal with consequential relief, ruling in favor of the appellant.

This detailed analysis of the judgment highlights the issues of eligibility for refund and unjust enrichment, the arguments presented by both parties, and the Tribunal's decision based on the evidence and legal principles involved in the case.