2008 (10) TMI 198 - AT - Customs

Refund of CVD paid despite exemption notification unjust enrichment - There is no dispute that the Cost Accountant had certified that the amount of refund claimed had been accounted as receivables from customs in the balance sheet of the appellants for the relevant financial year. In addition the Cost Accountant also certified that the amount incurred by the appellants towards CVD had not been taken into account for costing of the final product manufactured and sold by the appellants. They had reversed the corresponding CVD credit in their cenvat account. These evidence abundantly establish that the appellants are eligible for cash refund of the erroneously paid CVD and that the vice of unjust enrichment would not be attracted in granting refund to the appellants. Refund allowed. interest for delay in grant of refund also allowed.

Issues:
1. Eligibility for exemption claimed on imported waste paper.
2. Unjust enrichment in granting refund of erroneously paid CVD.
3. Claim for interest on the amount of refund.

Issue 1: Eligibility for exemption claimed on imported waste paper
The case involved M/s. South India Paper Mills Ltd. importing waste paper and later realizing that the imported waste paper was exempt from CVD when used in manufacturing newsprint under a specific notification. The Commissioner (A) confirmed the eligibility for exemption and ordered a refund of Rs. 8,44,187/- paid towards CVD. The Assistant Commissioner sanctioned the refund, which was credited to the Consumer Welfare Fund. The appellate order sustained the original authority's decision.

Issue 2: Unjust enrichment in granting refund of erroneously paid CVD
The appellants argued before the Commissioner (A) that refunding the erroneously paid CVD would not result in unjust enrichment. They provided a certificate from a Cost Accountant stating that the CVD amount had not been considered in the costing of the newsprint manufactured using the waste paper. They also claimed that the duty burden had not been passed on to customers. However, the Commissioner (A) rejected the appeal, stating that the appellants failed to prove that the duty incidence had not been passed on.

Issue 3: Claim for interest on the amount of refund
The appellants, in their appeal, requested interest on the refund amount from the date of the refund claim under Section 27A of the Customs Act. They cited a Supreme Court judgment where a similar case had been ruled in favor of the assessee, stating that refunding excess duty paid would not lead to unjust enrichment if proper evidence was provided. The Tribunal's decision in another case was also referenced, where the duty claimed as a refund had not been treated as revenue expenditure, supporting the notion that refund would not result in unjust enrichment. The Tribunal found that the appellants were entitled to the refund without unjust enrichment and allowed the appeal, granting interest as per the Customs Act provisions.

In conclusion, the appellate tribunal ruled in favor of M/s. South India Paper Mills Ltd., stating that they were eligible for the refund of the erroneously paid CVD without unjust enrichment. The decision was supported by evidence provided by a Cost Accountant and previous legal precedents. The appellants were also granted interest on the refund amount as per the Customs Act provisions.

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