2022 (3) TMI 1115 - AT - Customs

Refund claim of Special Additional Duty (SAD) - rejection on the ground of unjust enrichment - N/N. 102/2007-Cus. dated 14.09.2007 - HELD THAT - It is evident that it is the appellant importer who has borne the incidence of special additional duty (SAD) and has not passed on the same to the buyer of the goods. The learned Commissioner (Appeals) have erred in holding that the refund claim was hit under the doctrine of unjust enrichment - appellant is held entitled to refund of the amount of SAD ₹ 5,43,443/- - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the refund claim of Special Additional Duty (SAD) by the importer is hit by unjust enrichment.

Analysis:
The issue in this appeal revolves around the refund claim of Special Additional Duty (SAD) by the importer, determining whether the claim is affected by unjust enrichment. The appellant imported goods for resale and sought a refund of SAD deposited at the time of import in lieu of sales tax. The refund eligibility is linked to subsequent resale in India and the deposit of sales tax with the Sales Tax Department. The appellant filed a refund claim on 21.08.2017, meeting the conditions specified in Notification No. 102/2007-Cus. dated 14.09.2007. The refund claim was examined, and the Assistant Commissioner found that the importer fulfilled all stipulated conditions, making them eligible for the refund of Additional Duty of Customs paid at the time of importation.

Subsequently, the Revenue issued a show cause notice alleging discrepancies in a document supporting the refund claim. The notice raised concerns about the authenticity of a certificate from a Chartered Accountant, leading to doubts regarding the unjust enrichment aspect. The Revenue sought recovery of the refunded amount under Section 28(4) of the Act, along with interest and proposed penalties under Section 114AA. The matter had previously been remanded by the Tribunal for a decision on merit.

In the subsequent proceedings, the appellant argued before the Commissioner (Appeals) that the C.A. certificate was not a mandatory requirement for the refund sanction as per the amended notification. It was emphasized that the appellant had sold the goods in India post-import, paid sales tax, and did not pass on the burden of SAD to the buyer. The sales bill did not include a breakdown of additional duty, and the appellant explicitly stated on the invoice that no benefit of additional custom duty would be admissible to the buyer. The Tribunal concluded that the appellant, as the importer, bore the burden of SAD and did not transfer it to the buyer, thereby allowing the appeal and granting the refund of the SAD amount.

In conclusion, the Tribunal overturned the decision based on unjust enrichment, ruling in favor of the appellant's entitlement to the refund of SAD. The impugned order was set aside, affirming the appellant's eligibility for the refund amount.