2018 (6) TMI 1445 - HC - Customs

Refund of Customs duty - principles of unjust enrichment - invocation of Section 18 of the Act, prior to insertion of Section 18(5) of the Customs Act - Held that - The controversy is no longer res integra as the co-ordinate Bench of this Court in M/s Mangalore Refinery and Petrochemicals Ltd., Vs. Commissioner of Customs, 2015 (5) TMI 768 - KARNATAKA HIGH COURT in the case of same assessee, has already held in favor of the assessee that prior to amendment of Section 18(5) of the Act with effect from 13.07.2006, the ground of unjust enrichment of assessee cannot be invoked for denying the refund of custom duty determined and paid under the provisional assessment under Section 18 of the Act - unjust enrichment cannot be invoked - appeal dismissed - decided against Revenue.

Summary

Issues:
Interpretation of Section 18 of the Act regarding unjust enrichment for refund of custom duty paid by the respondent-assessee prior to the amendment of Section 18(5) of the Act.

Analysis:
The High Court of Karnataka heard an appeal filed by the revenue against an order by the CESTAT regarding the refund of custom duty paid by the respondent-assessee for 144 consignments imported during a specific period. The main issue was whether the ground of unjust enrichment applies to the refund of custom duty paid under Section 18 of the Act before the insertion of Section 18(5) by Act No.29/2006. The revenue contended that unjust enrichment should be considered, but the learned Counsel for the appellant conceded that a previous judgment by a co-ordinate Bench had already ruled in favor of the assessee on this matter. The co-ordinate Bench had held that prior to the amendment of Section 18(5) in 2006, unjust enrichment could not be invoked to deny the refund of custom duty paid under provisional assessment under Section 18.

The Court referred to a specific paragraph from the judgment of the co-ordinate Bench, which explained the relationship between Sections 18 and 27 of the Act concerning refund claims. It highlighted that prior to the amendment, the doctrine of unjust enrichment was not applicable to refund claims under Section 18. The amendment introduced provisions from Section 27 into Section 18 to prevent unjust enrichment. Therefore, the Court found that based on the settled law, no substantial question of law arose in the present appeal, and the appeal filed by the Revenue was dismissed accordingly.

In conclusion, the High Court upheld the previous ruling and dismissed the appeal, stating that the doctrine of unjust enrichment did not apply to refund claims under Section 18 of the Act before the relevant amendment. The judgment provided clarity on the application of unjust enrichment in the context of custom duty refunds and emphasized the legislative intent behind amending the relevant sections of the Act.