2023 (5) TMI 306 - AT - Customs

Refund of excess duty paid under sub-section (1) of Section 18 of Customs Act, 1962 - provision available under sub-section (2) of Section 18 ibid to reject refund of such excess duty paid, or not? - principles of unjust enrichment - certificate issued by the Chartered Accountant satisfy that the burden of duty has not been passed on third party or not - HELD THAT - The assessment was initially done under sub-section (1) of Section 18 of the Customs Act, 1962. The said provision deals with provisional assessment of duty. Sub-section (2) of Section 18 deals with the actions to be taken on finalization of such provisional assessment. The provisions under sub-section (2) of Section 18 of Customs Act, 1962 provide for 2 situations. One situation is when the provisionally assessed duty is less than the finally assessed duty. That situation is not present in the case on hand. The other provision is about the action to be taken when provisionally assessed duty is higher than finally assessed duty. These provisions are applicable in the present case. The same sub-section (2) has provided that when the provisionally assessed duty is higher than the finally assessed duty then the original authority has two options. One is either to credit such refundable amount to consumer welfare fund when duty burden has not been borne solely by the importer and the other situation is that if it is establish that the importer has not passed on the incidence of such duty then the excess amount is to be refunded to the importer. The order is not in accordance with the provisions of sub-section (2) of Section 18 of Customs Act, 1962. The original authority has, for the reason of unjust enrichment, rejected the refund claim. When excess duty is paid under sub-section (1) of Section 18 of Customs Act, 1962, under sub-section (2) of Section 18 ibid there is no provision for rejection of refund of excess duty collected initially. Matter remanded back to the original authority with a direction to decide the case in accordance with the provisions of Customs Act, 1962. The appeal is allowed by way of remand.

Summary

Issues:
The case involves the refund of excess paid customs duty and social welfare surcharge, rejection of refund by the original authority based on unjust enrichment, and the appeal against the Order-in-Original dated 05.03.2019.

Refund of Excess Duty:
The appellant imported Ethylene and filed Bill of Entry, with goods provisionally assessed under Section 18(1) of the Customs Act, 1962. The final assessment concluded an excess payment of Rs. 97,34,967, out of which input tax credit was availed for Rs. 84,74,852. The issue of refund of the remaining amount of Rs. 12,60,116 was examined by the original authority, who rejected it based on unjust enrichment. The appellant appealed to the learned Commissioner (Appeals), who upheld the original authority's decision. The appellant then approached the Tribunal, arguing that the refund should be granted as per relevant provisions.

Legal Analysis:
The Tribunal examined the provisions of Section 18 of the Customs Act, 1962, specifically sub-section (2) which addresses situations where provisionally assessed duty is higher than finally assessed duty. The Tribunal noted that the original authority's rejection of the refund claim based on unjust enrichment was not in accordance with the law. The provisions state that if the importer has not passed on the duty burden, the excess amount should be refunded. Therefore, the Tribunal remanded the matter back to the original authority to decide in accordance with the law, allowing the appellant to present their case before a fresh decision is made.

Conclusion:
The Tribunal allowed the appeal by way of remand, directing the original authority to reconsider the refund claim in line with the provisions of the Customs Act, 1962. The decision was pronounced in court on 31.03.2023.