2018 (4) TMI 978 - AT - Customs

Maintainability of refund claim - doctrine of unjust enrichment - denial on the ground that it did not fulfill the conditions contained in the N/N. 46/2011 - whether refund claim is maintainable, without challenging the order of assessment passed by the assessing authority? - whether the doctrine of unjust enrichment is applicable to the facts of this case, for denying the refund benefit to the appellant? Held that - rejection of refund application by the authorities below, on the ground that the assessment order has not been challenged, cannot be sustained - there is specific mention that the appellant had shown the excess paid customs duty in its books of account, under the head Excess Custom Duty Paid Refundable . There is no ambiguity in the said statutory provision, in vogue at present, that order of assessment has to be challenged and thereafter, as a consequence of favourable adjudication, the refund claim has to be filed and to be entertained by the Department - It transpires from the said findings of the original authority that the doctrine of unjust enrichment is not applicable in the case of the appellant, for denying the refund benefit to it. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim maintainability without challenging the assessment order and applicability of the doctrine of unjust enrichment for denying the refund benefit.

Analysis:
In this case, the appellant, engaged in manufacturing washing soap, imported Palm Acid Oil and claimed exemption under Notification No. 12/2012 and later sought a refund under Notification No. 46/2011. The Customs department initially accepted the exemption but later denied the refund, citing non-fulfillment of conditions. The appellant filed a refund application, which was initially granted but later reviewed by the department, leading to an appeal before the Commissioner (Appeals) and subsequently to the Tribunal.

The appellant argued that under Section 27 of the Customs Act, the refund can be claimed for duty paid or borne by the importer, irrespective of challenging the assessment order. The appellant relied on a Delhi High Court judgment supporting this interpretation. On the other hand, the Revenue contended that the assessment was based on different grounds than the refund claim and that the doctrine of unjust enrichment applied, citing relevant case law.

The Tribunal analyzed the statutory provisions and recent judgments, emphasizing that under the amended Section 27 of the Act, any duty paid can be claimed as a refund without the condition of an assessment order challenge. The Tribunal referenced the Delhi High Court judgment to support this interpretation, stating that the assessment order challenge prerequisite was deleted. The Tribunal found that the appellant was entitled to the refund as the excess duty was paid and not passed on to any person, thus rejecting the Revenue's argument on unjust enrichment.

Conclusively, the Tribunal held that the rejection of the refund application based on the non-challenge of the assessment order was not sustainable. The Tribunal also noted the appellant's proper accounting records and certification by a Chartered Accountant, indicating no unjust enrichment. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.

In summary, the Tribunal clarified the refund claim process under Section 27 of the Customs Act, emphasizing the entitlement to a refund irrespective of challenging the assessment order. Additionally, the Tribunal highlighted the importance of proper documentation to demonstrate the absence of unjust enrichment, ultimately ruling in favor of the appellant.