2018 (8) TMI 1699 - AT - Customs

Refund Claim - unjust enrichment - finalization of provisional assessment - Held that - Test of unjust enrichment was introduced for refund arising from finalization of assessment with effect from 13th July 2006 and the failure to pass muster should have resulted in transfer of the sanctioned amount to the Consumer Welfare Fund as envisaged in section 18(5) of Customs Act, 1962 - Such an exercise does not appear to have been undertaken by the original authority and the first appellate authority has merely confirmed the rejection without ascertaining this aspect - rejection of the refund claim is patently improper - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection based on unjust enrichment

Analysis:
The appeal was filed against the rejection of a refund claim amounting to &8377; 9,48,536/- by M/s Ashapura Trade and Transport Pvt Ltd. The dispute arose from the import of 'battery powered vehicles' subject to provisional assessment due to a dispute on the applicability of additional duty. The appellant had paid a revenue deposit of &8377; 3,21,260/- for provisional assessment, which was later claimed as a refund after finalization of assessment in their favor.

The main argument presented was that the rejection of the refund claim was based on the appellant availing CENVAT credit, which, according to the appellant, should not disentitle them from the refund benefit. It was contended that the availment and utilization of CENVAT credit fall under a different law not supervised by customs authorities, and any illegible availment should be addressed by the competent authorities under the Customs Act, 1962.

The Tribunal found the argument convincing, emphasizing that the original and first appellate authorities were required to decide the refund application in accordance with the provisions of the Customs Act, 1962. The test of unjust enrichment was introduced for refunds from finalization of assessment, and the failure to meet this test should result in transferring the sanctioned amount to the Consumer Welfare Fund. However, this aspect was not addressed by the authorities, and the rejection was confirmed without proper consideration.

The appellant provided evidence, including a certificate from a Chartered Accountant and the balance sheet, indicating that the deposited amount did not form part of the goods' value sold to customers and was accounted for as 'receivable.' Based on the compliance and evidence showing that the appellant bore the deposit's incidence, the Tribunal deemed the rejection of the refund claim as improper and set aside the impugned order, allowing the appeal with consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, highlighting the importance of following the provisions of the Customs Act, 1962, and properly assessing the unjust enrichment aspect in refund claims to ensure fair treatment and compliance with the law.