2023 (2) TMI 285 - HC - Customs

Rejection of refund of Extra Duty Deposit - applicability of principles of natural justice - petitioner contended that EDD was in the nature of a deposit and therefore, the principle of unjust enrichment ere inapplicable to deposit of EDD - request for refund was treated as a fresh application under Section 27 of the Customs Act, 1962 and was rejected by the impugned order on the ground that the same was not filed within limitation - HELD THAT - Respondent no. 1 has misdirected itself in considering the petitioner s request for refund of the balance amount of ₹13,53,326/- made on 22.07.2022 as a fresh application. The said request was in continuation of the proceedings relating to the application for refund dated 19.02.2019. Thus, the question of the petitioner s claim being barred by limitation does not arise. The authorities are fully aware of the orders passed by the Supreme Court in Suo Motu Writ Petition (Civil) No.3 of 2020 2021 (3) TMI 497 - SC ORDER and this Court cannot countenance the approach of the respondents to insist that the orders passed by the Supreme Court be necessarily quoted by applicants for availing their benefit. The respondents are bound to consider the orders passed by the Supreme Court notwithstanding that the same are not referred to by the applicants. The impugned order dated 07.11.2022 is set aside. The respondent is directed to forthwith process the petitioner s request for refund within a period of two weeks from today - Appeal allowed.

Summary

Issues:
1. Rejection of application for refund of Extra Duty Deposit (EDD) by the respondents.
2. Interpretation of the principle of unjust enrichment in the context of EDD.
3. Failure to process the petitioner's refund application despite a favorable appellate order.
4. Rejection of the petitioner's request for refund as a fresh application due to alleged limitation issues.
5. Consideration of Supreme Court orders in relation to limitation issues.

Analysis:
1. The petitioner challenged the rejection of its refund application for EDD amounting to Rs. 13,53,326 by the respondents through a writ petition. The petitioner contended that it had imported goods from related parties and had filed for refund after finalization of proceedings before the Special Valuation Branch (SVB) as per Customs rules. The initial refund claim was partly allowed, but a portion was rejected on the ground of unjust enrichment, which was later set aside by the Commissioner of Customs (Appeals) in a subsequent order.

2. The Court analyzed the concept of unjust enrichment concerning EDD, emphasizing that the deposit nature of EDD exempts it from the principle of unjust enrichment. The appellate order had already determined the petitioner's entitlement to the refund amount, making the rejection by the respondents unwarranted.

3. Despite the favorable appellate order, the respondents failed to process the petitioner's refund application, leading to a subsequent request by the petitioner for the refund balance. The Court noted that the subsequent request was a continuation of the original application and not a fresh one, dismissing the limitation argument raised by the respondents.

4. The respondents contended that the petitioner's request for refund was time-barred and cited a Supreme Court order related to the exclusion of certain periods for limitation purposes. However, the Court found this argument baseless, stating that the petitioner's claim was not barred by limitation, and the failure to quote the Supreme Court order did not affect the petitioner's entitlement to the refund.

5. In conclusion, the Court set aside the impugned order, directing the respondents to process the petitioner's refund request promptly and consider any entitlement to interest as per the law. The appeal was allowed in favor of the petitioner, emphasizing the respondents' obligation to adhere to judicial orders, even if not explicitly referenced by the applicants.