2021 (6) TMI 792 - AT - Customs

Refund of duty paid - duty element to the extent of which refund was claimed, was passed on to the buyer or not - refund amount to be deposited in Consumer Welfare Fund or not? - principles of unjust enrichment - HELD THAT - A perusal of the adjudication orders reveals that the Adjudicating Authority has mainly verified the usage of raw materials in the production of the final product between 17.10.2017 and 04.11.2017(19 days) in respect of first BOE/Order and between 27.10.2017 and 04.11.2017 (9 days) in respect of second BOE/Order. However, there is no finding at all as regards the primary contention of the appellant that the Basic Customs Duty itself was not legally payable, but was paid in excess - Further, stock movement is traced from the date of its import, to its usage (19/9 days), but a finding is given to the effect that the same was sufficient to hold the passing on of the duty element. However, there is no finding at all as to what was actually passed on; rather, the exact amount of duty that was passed on is not there which is very vital. The Adjudicating Authority has very comfortably adopted the amount of refund claimed as the amount of duty passed on without demonstrating the specific amount, from the books or the Balance sheet. The impugned order is not sustainable, is liable to be set aside - the matters are remanded to the file of the Adjudicating Authority to determine the above factual matrix after giving sufficient and reasonable opportunities to the appellant - appeal allowed by way of remand.

Summary

Issues:
1. Provisional assessment of imported goods.
2. Excess duty payment and refund claims.
3. Application of unjust enrichment principle.
4. Credit of refund amount to Consumer Welfare Fund.

Provisional Assessment of Imported Goods:
The appellant imported "Vinyl Chloride Monomer (VCM)" and sought provisional assessment due to the unavailability of original documents. The Bills-of-Entry were provisionally assessed, and duty was paid for the declared quantity. The appellant later requested final assessment after submitting original documents, revealing excess duty payment due to discrepancies in declared and actual unit prices.

Excess Duty Payment and Refund Claims:
The Adjudicating Authority determined the excess duty paid and refund claims for Basic Customs Duty (BCD) and Customs Education Cess. The appellant's claims were examined in terms of unjust enrichment, concluding that duty passed on to the buyer, thus refunding the excess duty but ordering it to be credited to the Consumer Welfare Fund.

Application of Unjust Enrichment Principle:
The Adjudicating Authority analyzed the raw material usage in production and stock movement to ascertain if duty was passed on. Despite refunding the excess duty, it was held that the duty element was passed on to the buyer, invoking the unjust enrichment principle and ordering the refund to be credited to the Consumer Welfare Fund.

Credit of Refund Amount to Consumer Welfare Fund:
The appellant appealed against the order directing the refund amount to be deposited in the Consumer Welfare Fund. The appellate authority found discrepancies in the findings, highlighting the lack of clarity on the legality of the duty payment and the specific amount passed on. The order was deemed unsustainable, set aside, and remanded for a detailed determination with opportunities for the appellant to present their case adequately.