2019 (5) TMI 1080 - AT - Customs

Refund of excess paid duty - unjust enrichment - machines sold at a loss - HELD THAT - Once the sale price is less and that the one out of five machines could not fetch any money, as it could not be sold, it is clear that the appellant had suffered. It is settled principle that when there is an element of loss, there arises no question of any unjust enrichment. Section 27 (2) of Customs Act, 1962 stipulates that the refundable amount shall be credited to Consumer Welfare Fund but only in a condition where it is shown that the burden of duty paid has been passed on by the importer. As per Customs Manual also, the condition of holding unjust enrichment and for appropriating / transferring the amount refundable to Consumer Welfare Fund is applicable except where the importer has not passed the incidence of such duty and interest to any other person (there are other conditions also but not applicable to the facts of the present case). It becomes abundantly clear that if and only if the incidence of duty is proved to be passed on by the importer to the buyers that the refund of the impugned amount could be transferred to the Consumer Welfare Fund. The order under challenge is the result of mere presumptions. There is no evidence by the Department to rebut the certificate given by the appellant s Chartered Accountant. Otherwise also the higher duty as was assessed provisionally stands already set aside - Seen from any angle, it is not at all the case of appellant being enriched unjustly. Refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against provisional assessment and refund claim for excess duty paid leading to alleged unjust enrichment.

Analysis:
1. The appellant imported 5 used printing machines, provisionally assessed at a higher value by the Department, leading to higher duties paid. Subsequently, the order of Commissioner (Appeals) confirming the assessment was set aside by the Tribunal. The appellant then filed a refund claim for the excess duty paid, which was proposed to be credited to the Consumer Welfare Fund due to alleged unjust enrichment.

2. The appellant argued that no excise duty was charged in the invoices, indicating no passing on of the duty to buyers. It was contended that the machines were sold at a lower price than purchased, resulting in a loss for the appellant. Reference was made to the Mafatlal Industries case to support the claim that unjust enrichment did not apply in this scenario.

3. The Department contended that since the excess duty amount was not shown as outstanding due from the Government, it was treated as an expenditure passed on to the buyers. Therefore, the refund was to be appropriated back to the Consumer Welfare Fund as per the Customs Act. The Department sought dismissal of the appeal.

4. The Tribunal noted that the appellant suffered a loss as only four out of five machines were sold at prices lower than the cost, which included duty. It was emphasized that the principle of unjust enrichment applies when there is no loss to the importer. The Tribunal highlighted the requirement to prove that the duty burden was passed on to buyers for the refund to be transferred to the Consumer Welfare Fund.

5. The Commissioner (Appeals) presumed that the duty amount treated as expenditure indicated unjust enrichment. However, the Tribunal found this presumption flawed as the Chartered Accountant's certificate confirmed that the duty amount was not passed on to buyers. Citing relevant case laws, the Tribunal concluded that there was no evidence to support unjust enrichment, and the order under challenge was set aside, allowing the appeal.

In conclusion, the Tribunal set aside the order, emphasizing the lack of evidence to prove unjust enrichment and highlighting the importance of demonstrating the passing on of duty burden to buyers for refund appropriation.