2017 (7) TMI 376 - AT - Customs

Refund claim - unjust enrichment - Held that - It is abundantly clear from the records that the appellant in the present instance had been required, under the extant procedures, to deposit a certain sum of money with the customs authorities pending finalisation of the assessment. It is nobodys case that the amounts collected had been included in the duty levied before clearance of the goods on provisional assessment. To the extent that the said deposit is not included in the assessed duty, it would not have to be subject to the rigours of the hurdles that precede sanction and transfer of the refund to the applicant. It devolves upon the competent authority to examine the evidence of having borne the incidence furnished by the applicant and to render cogent findings on the non-acceptability of such evidence before ordering the credit of the claimed amount to the Fund - the first appellate authority has not done so. It would, therefore, be in the fitness of things for a re-examination of the claim by the original authority to determine if in the context of evidence furnished by the appellant, the burden of duty has indeed been passed on - appeal allowed by way of remand.

Issues:
1. Limitation of refund claim by the original authority.
2. Handling of the refund claim by an authority not empowered to do so.
3. Applicability of the doctrine of unjust enrichment in the case.
4. Examination of evidence regarding the passing on of duty incidence.
5. Justification for crediting the claimed amount to the Fund.

Issue 1: Limitation of refund claim by the original authority

The original authority had restricted the refund claim to a portion of the amount applied for, citing lack of jurisdiction to process deposits related to bills of entry assessed by other groups. The Appellate Tribunal found this limitation unjustified as a refund claim under section 27 of the Customs Act, 1962 should be handled by the Assistant/Deputy Commissioner in charge of the Refunds section. Handling the claim by a different authority without notifying the applicant violated principles of natural justice, leading to the quashing of the proceedings before the original and appellate authorities.

Issue 2: Handling of the refund claim by an unauthorized authority

The Appellate Tribunal ruled that the refund claim had been decided by an authority not empowered to do so, emphasizing the need for consistency and validity in processing such claims. The claim should have been processed entirely by the authority responsible for sanctioning refunds. Failing to notify the applicant of the segmented handling of the claim rendered the proceedings invalid. To ensure appropriate handling, the Tribunal set aside the previous order for a proper assessment of the refund claim.

Issue 3: Applicability of the doctrine of unjust enrichment

The Tribunal discussed conflicting decisions from different High Courts regarding the application of the doctrine of unjust enrichment in customs cases. While one decision suggested that the doctrine applies only after final assessment, another emphasized the need to satisfy requirements before refund under section 27 of the Customs Act, 1962. The Tribunal concluded that the deposit, considered a surety, should not be subject to the same tests as duty payments before granting a refund.

Issue 4: Examination of evidence on duty incidence passing

The Tribunal noted that the original and appellate authorities failed to examine evidence provided by the appellant regarding the passing on of duty incidence. Various decisions on unjust enrichment highlight the need to ascertain if duty costs were included in the prices charged to customers. The burden lies with the competent authority to assess evidence of duty incidence passing before crediting the claimed amount to the Fund.

Issue 5: Justification for crediting the claimed amount to the Fund

Given the lack of examination of evidence by the previous authorities, the Tribunal directed a re-examination of the claim to determine if the burden of duty had been passed on. If the original authority cannot justify the default eventuality under the Customs Act, the deposit should be refunded to the appellant instead of being credited to the Fund. The Tribunal set aside the previous order and directed the competent authority to dispose of the refund application appropriately.

This detailed analysis of the judgment covers all the issues involved comprehensively, highlighting the key legal aspects and decisions made by the Appellate Tribunal.

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