2024 (3) TMI 195 - AT - Customs

Refund claim - Principles of unjust enrichment - Imported goods as ''wireless telephone'' - whether the lower authorities were right in rejecting the refund claims on the question of unjust enrichment - whether the refund amount of the penalty was rightly rejected as time barred - HELD THAT - With regard to refund of the penalty amount, As seen from the order, an appeal was filed by the appellant against the Order-in-Original No. 36/2004 and the penalty was set aside. Therefore, the observations of the Commissioner (Appeals) in the impugned order that the appellant has not preferred any appeal before the Tribunal against the Order-in-original 36/2004 is factually incorrect and accordingly, denial of refund of Rs.20,00,000/- cannot be sustained. Refund of the differential duty amount - It is clear that the tender documents clearly prove that the appellant was to bear the increase in duty burden and as submitted by the appellant s Chartered Accountant certificate dated 15.3.2012 had only stated that the additional duty along with interest and penalty paid had resulted in erosion of profit/increase in the loss. Alternative plea of the appellant that unjust enrichment is not applicable to State Undertakings as has been held in the case of CCE, Bangalore vs. Karnataka State Agro Corn Products Limited 2006 (7) TMI 11 - HIGH COURT OF KARNATAKA (BANGALORE) . Thus, we do not find any merit in the impugned orders to deny the refund on the ground of unjust enrichment. For the reasons discussed above, the impugned orders are set aside and allow the appeals with consequential relief, if any, as per law.

Summary

Issues Involved:
1. Refund claim rejection on the ground of unjust enrichment.
2. Rejection of refund claim as time-barred.

Summary:

Issue 1: Refund Claim Rejection on the Ground of Unjust Enrichment

The appellant, M/s. ITI Ltd. Bangalore, imported wireless telephone consignments and paid differential duties under protest. They sought refunds, which were partially sanctioned, with the remaining amounts credited to the Consumer Welfare Fund under Section 27(2) due to the doctrine of unjust enrichment. The appellant argued that their tender documents and fixed pricing with BSNL indicated that they bore the duty burden, not passing it to customers. The Tribunal noted that the tender documents and Chartered Accountant's certificate supported the appellant's claim of bearing the duty burden, thus unjust enrichment did not apply. The Tribunal referenced several decisions, including Mafatlal Industries Ltd. vs. Union of India, which held that the doctrine of unjust enrichment is inapplicable to the State and State undertakings. Consequently, the Tribunal found no merit in denying the refund on unjust enrichment grounds and allowed the appeals.

Issue 2: Rejection of Refund Claim as Time-Barred

The Tribunal addressed the rejection of a Rs. 20,00,000/- refund claim as time-barred, noting that the appellant had indeed filed an appeal against the relevant Order-in-Original, contrary to the Commissioner (Appeals)' observations. The Tribunal found that the penalty was set aside by a prior order, making the rejection of the refund unsustainable.

Conclusion:

The Tribunal set aside the impugned orders, allowing the appeals with consequential relief, as per law, and pronounced the order in open court on 04.03.2024.