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Issues: Availability of refund to M/s. Korin India Ltd.
Analysis: The issue in these appeals revolves around the availability of a refund to M/s. Korin India Ltd. concerning the security amount they deposited for the provisional clearance of imported machinery. The Assistant Commissioner initially ordered the refund to be credited to the Consumer Welfare Fund, but the Commissioner (Appeals) set aside this order, stating that the amount was a security deposit and the doctrine of unjust enrichment did not apply in the case of captive consumption. The matter was remanded to the Adjudicating Authority for further examination based on the balance sheet and other documents. The subsequent Adjudication Order again directed the refund to be credited to the Consumer Welfare Fund, alleging that the amount had been recovered from buyers by including it in the costing of final goods. The Commissioner (Appeals) determined that only a portion of the refund was admissible, as the rest had been included in the machinery's costing and passed on to buyers. The learned Counsel for M/s. Korin India Ltd. argued that the security amount should be refunded as per Section 18 of the Customs Act, emphasizing that the amount was not a duty deposit and therefore not subject to the provisions of Section 27 of the Customs Act. They relied on legal precedents, including the decision in Mafatlal Industries Ltd. v. U.O.I., which excluded refund of security from the principle of unjust enrichment. They also cited the case of Oswal Agro Mills Ltd. v. Assistant Collector, emphasizing that a bank guarantee does not equate to payment of excise duty. Furthermore, they referenced the decision in Somaiya Organics v. State of U.P., supporting that a bank guarantee does not constitute payment. The Counsel contended that the security amount should be considered separately from duty deposits, citing relevant case law to support their argument. On the contrary, the learned SDR argued that the duty had been passed on to customers, making the importer ineligible for a refund. They claimed that the Commissioner (Appeals) erred in allowing a partial refund, as the duty deposit had been included in the machinery's costing and formed part of the importer's expenditure. The SDR referenced the decision in UOI v. Solar Pesticides Ltd. to support the position that the duty incidence had been passed on to the buyer. Upon considering the submissions, the Tribunal found merit in the Counsel's arguments that the additional amount paid by M/s. Korin India Ltd. was a surety and not part of the duty. Citing legal precedents and decisions, including Mafatlal Industries Ltd. and Escorts Yamaha Motors Ltd., the Tribunal concluded that the provisions of unjust enrichment did not apply in cases of final assessment following provisional clearance. The Tribunal held that the importers were entitled to a refund of the entire amount, as the duty had been cleared provisionally, and the declared value had been accepted by the Customs House. The Tribunal rejected the Revenue's appeal and allowed the appeal filed by M/s. Korin India Ltd., granting them the refund in full.
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