2021 (4) TMI 1206 - HC - Customs

Application for contempt proceedings - Interest on Refund of duty - principles of unjust enrichment - case of appellant is that the amount of refund was directed to be credited to the Consumer Welfare Fund under Section 27(2) of the Customs Act, 1962 but the claim for interest was rejected - HELD THAT - The Court has extracted the observations from the order-in-original dated 29.11.2019, which was impugned in the petition. The Court held and observed that the process involved in processing the refund casts serious duty upon the concerned officer to advert to the facts pleaded before the authority for coming to the conclusion that though refund is payable but the same is required to be deposited and paid in the Consumer Welfare Fund for want of any document or other evidence to indicate that the payment of refund would not result into unjust enrichment to the recipient . The Court found complete silence in the order impugned qua the contention of the applicant and accordingly, held that on the face of it, the order impugned indicated that the machinery in question, on which duty was paid and duty was sought to be claimed as refund, was not in any manner capable of being dealt with or for passing on, so as to pass on the burden of duty to the consumer or end-user. The Court was quite annoyed by the fact that the contention raised by the applicant in relation to the duty paid on the machinery, which was sought to be claimed as refund, was not addressed since the contention of the applicant was all along that there was no consumer or end user and therefore, in no manner, goods were capable of being dealt with or passed on, so as to pass on the burden of duty to the consumer or the end-user. This being a vital aspect and as there was complete silence in answering this vital issue, the Court directed the authority to decide this issue which would have a bearing on the issue of refund given to the consumer welfare fund and interest. Thus, both the aspects of refund and interest, after affording opportunity to the applicant were to be concluded instead of ordering consideration of the aspect of interest alone. The act, alleged to be willful and in complete defiance of the Courts directions, is an act which based on the interpretation of the order and on law and the same cannot be said to be in willful disobedience of the order of this Court. The jurisdiction under the Contempt of Courts Act is not to be invoked unless the Court finds that the act on the part of the authority is deliberate and in willful disobedience of the order of this Court. Unless a real and serious prejudice is shown, which can be regarded as a substantial interference with the due course of justice, this jurisdiction would not be available - in the instant case addresses the contention of the applicant, which, according to the Court, had not been dealt with in the previous order and if the same has also been addressed by giving cogent reasons, what all the applicant is expected to do is to question the outcome before the appellate authority or by way of appropriate legal challenge. The non-grant of refund to the applicant and instead to the Consumer Welfare Fund and denial of interest are not the realms which need to be gone into in this application for contempt under the Contempt of Courts Act - application dismissed.

Issues Involved:
1. Contempt of Court under the Contempt of Courts Act.
2. Refund of customs duty and interest under the Customs Act, 1962.
3. Unjust enrichment and its implications on the refund claim.

Issue-wise Detailed Analysis:

1. Contempt of Court under the Contempt of Courts Act:
The applicant, Oil and Natural Gas Corporation Ltd., filed an application for contempt under the Contempt of Courts Act against the Customs authority. The applicant alleged willful and deliberate disobedience of the Court's order dated 20.02.2020, which directed the authority to decide on the refund and interest without insisting on additional material. The applicant contended that the Customs authority re-examined the aspect of unjust enrichment and directed the refund amount to be credited to the Consumer Welfare Fund, contrary to the Court's order.

The respondent authority, represented by the Assistant Commissioner (Refund), filed an affidavit tendering an unconditional apology and explained that the decision was based on the interpretation of the Court's order. The Court held that the jurisdiction under the Contempt of Courts Act should not be invoked unless there is a deliberate and willful disobedience of the Court's order. The Court found that the respondent authority's actions were based on their interpretation of the order and not in willful defiance.

2. Refund of customs duty and interest under the Customs Act, 1962:
The applicant had entered into a contract with M/s. Techno Exports, Moscow, for conducting a seismic survey and imported equipment for the said work. The goods were provisionally cleared, and the applicant claimed a refund of the excess customs duty paid. Various rounds of litigation led to an order dated 21.08.2013 by the Commissioner, Customs Department, directing the finalization of all 16 Bills of Entry. Despite this order, the Customs authority did not finalize the refund and continued to demand documents until a final assessment order was passed on 23.01.2017. The applicant filed a petition claiming a refund of ?5,51,82,641.08 along with interest.

The Court's order dated 20.02.2020 directed the authority to decide on the refund and interest without insisting on additional material. The respondent authority, however, directed the refund to be credited to the Consumer Welfare Fund under Section 27(2) of the Customs Act, 1962, citing unjust enrichment. The applicant argued that the authority's decision was in deliberate disobedience of the Court's order.

3. Unjust enrichment and its implications on the refund claim:
The respondent authority argued that the refund claim was subject to the condition of unjust enrichment, as provided under Section 27(2) of the Customs Act, 1962. The authority contended that the applicant failed to provide documentary evidence to establish that the incidence of customs duty was not passed on to the buyers or any other persons. The respondent emphasized that the refund was credited to the Consumer Welfare Fund due to the applicant's failure to justify unjust enrichment.

The Court noted that the respondent authority had passed a reasoned order based on the material available on record and after affording the applicant an opportunity to produce additional material. The Court found that the authority's actions were not in willful disobedience of the Court's order. The Court held that the applicant should seek recourse through appropriate legal channels to challenge the authority's decision rather than invoking contempt jurisdiction.

Conclusion:
The Court dismissed the application for contempt, emphasizing that the respondent authority's actions were based on their interpretation of the Court's order and not in willful defiance. The Court directed the parties to approach the appropriate forum for raising their contentions and adjudication without being influenced by the disposal of this petition.

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