2007 (11) TMI 134 - AT - Customs

Assessee became entitled to refund after provisional assessment - Section 18 of the Customs Act, 1962 has been amended w.e.f. 14-7-06, specifically providing for application of unjust enrichment clause in respect of refund arising out of finalization - as their refund claim related to the period prior to 14-7-06 sanction of refund claim is in order refund allowed doctrine of unjust enrichment is not applicable

Summary

Issues:
Department's appeal against order upholding refund claim - Application of unjust enrichment clause - Amendment to Section 18 of the Customs Act, 1962 - Pre and post-amendment refund claims - Interpretation of relevant provisions - Judicial precedents on unjust enrichment in provisional assessments.

Analysis:

1. The appeal before the Appellate Tribunal concerned the department's challenge against an order upholding a refund claim by the assessee, which arose from the finalization of provisional assessment. The original adjudicating authority and the Commissioner (Appeals) both ruled in favor of the assessee, entitling them to a refund of a specific amount.

2. The department, represented by the Id. DR, relied on the decision of the Hon'ble High Court of Bombay in a specific case to argue that any refund due after finalization of provisional assessment should be subject to the unjust enrichment clause. The department contended that a Special Leave Petition filed against this judgment was dismissed by the Hon'ble Supreme Court.

3. The consultant for the respondents argued that an amendment to Section 18 of the Customs Act, 1962, introduced the application of the unjust enrichment clause in cases of refund arising from finalization. Citing a Tribunal decision, the consultant maintained that since the refund claim in question related to a period before the amendment, the refund was justified. Notably, no show cause notice for recovery of the refund had been issued.

4. The Tribunal analyzed the relevant legal provisions and judicial precedents, emphasizing the impact of the amendment to Section 18 of the Customs Act, 1962, effective from a specific date. The Tribunal referenced a Supreme Court judgment to support the application of the law as it stood at the time of finalization of the assessments in question.

5. Considering the legal framework and precedents, the Tribunal found no valid grounds to interfere with the lower authorities' decisions in favor of the respondents. Consequently, the department's appeal was rejected, affirming the refund claims of the respondents based on the applicable provisions and judicial interpretations.

This detailed analysis of the judgment highlights the issues, arguments presented by both sides, relevant legal provisions, and the Tribunal's reasoning based on judicial precedents and statutory amendments.