2008 (7) TMI 370 - AT - Customs

Refund Excess Payment of duty unjust enrichment claim of cenvat credit of CVD - the fact that there was short-receipt of the quantity as compared to the bill of lading quantity was known much before finalization of provisional assessment and in respect of 5 bills of entry the excess duty was found to have been paid and admittedly this was basically due to the fact that price declared was provisional since the appellants should have and could have challenged the finalization order immediately which they had not done and shortage also in this case is part of the assessment process no challenge of assessment However in view of Apex Court decision matter remanded to examine further and test the provisions of unjust enrichment.

Summary

Issues Involved:
1. Non-challenge of the final assessment order.
2. Alternative request for remission under Section 23(1) of the Customs Act, 1962.
3. Credit of Countervailing Duty (CVD) taken by the appellants.
4. Unjust enrichment and the burden of proof regarding the non-passing of the duty incidence.

Issue-Wise Detailed Analysis:

Non-Challenge of the Final Assessment Order:
The refund claims were initially rejected on the ground that the final assessment order was not challenged. The appellants argued that the assessment of duty on goods not imported is a nullity, thus the payment should be treated as a deposit liable for refund, not governed by Section 27 of the Customs Act, 1962. They cited several judgments, but none were found comparable on facts. The Tribunal concluded that the appellants should have challenged the finalization order immediately after knowing the short-receipt of quantity, which was part of the assessment process. Hence, the contention that the assessment is a nullity and Section 27 is not applicable was rejected.

Alternative Request for Remission under Section 23(1) of the Customs Act, 1962:
Since the Tribunal concluded that refund claims could be filed under Section 27 and none were time-barred, the alternative request for remission under Section 23 was not addressed further.

Credit of Countervailing Duty (CVD) Taken by the Appellants:
The original adjudicating authority mentioned that the appellants had already taken credit of CVD, making the refund inadmissible. This point was not addressed by the appellants in their written submission. The Tribunal noted that this issue becomes relevant only if the refund is deemed admissible, in which case, the actual amount of credit taken should be deducted from the refund.

Unjust Enrichment and the Burden of Proof:
The appellants contended that unjust enrichment does not apply since the quantity found short was not imported. However, the Tribunal observed that the appellants' contention of no assessment on short goods was incorrect. The Tribunal referenced the Apex Court's decision in Sahakari Khand Udyog Mandal Ltd. v. C.C.E. & Cus., which mandates that the appellant must prove that the duty burden has not been passed on to the consumer. Despite the appellants citing various judgments to argue against unjust enrichment, the adjudicating authority relied on the Solar Pesticides case, which held that unjust enrichment applies even in captive consumption cases. The Tribunal concluded that the appellants must produce proof showing that the duty burden was not passed on. The appeal was remanded back to the original adjudicating authority for the appellants to present such evidence.

Conclusion:
The Tribunal remanded the case back to the original adjudicating authority to allow the appellants to produce evidence proving that the duty burden was not passed on, thereby addressing the issue of unjust enrichment. The judgment emphasized the applicability of Section 27 of the Customs Act, 1962, and the necessity for appellants to challenge the final assessment order promptly.