2005 (3) TMI 333 - AT - Customs

Imports of two Diesel Generating Sets (D.G. Sets) - 100% E.O.U - Refund of excess paid duty(Customs) - Unjust enrichment - sale of de-bonded goods - HELD THAT - This is a case where de-bonded goods have sold. There is nothing wrong in the presumption of the Revenue that the duty burden is included in the sales price. But the error committed by the Revenue is in presuming that duty collected in excess of what is payable had been passed on to the buyers. Whenever there is a composite price inclusive of all duties, the meaning is that the price includes only the duty payable. We cannot presume that the excess duty paid by mistake is passed on to the buyer. In the present case, the sale price, no doubt, includes all statutory levies payable. That means, after some time the seller should not come to the buyer for extra amounts on the plea that further duty has to be paid to the Department. The presumption that the sale price includes duty erroneously paid in excess has no basis. More precisely, the sale price includes only the duty payable. Thus, there is no question of unjust enrichment. We allow the appeal with consequential relief.

Summary

Issues:
Refund claim for excess payment of customs duty based on unjust enrichment.

Analysis:
The case involved an appeal against an Order-in-Appeal passed by the Commissioner of Customs & Central Excise, Bangalore. The appellant, a 100% E.O.U., imported Diesel Generating Sets under the E.O.U. scheme in 1986, later de-bonded and sold to a buyer. The appellant realized an overpayment of customs duty and filed a refund claim. The dispute centered around unjust enrichment, with the lower authorities rejecting the claim but ordering the amount to be credited to the Consumer Welfare Fund. The appellant contended that the duty burden was not passed on to the buyer, supported by documents and case laws. The Revenue argued that the sale price included duty, implying unjust enrichment if a refund was granted. The Tribunal analyzed the facts and legal precedents, emphasizing that a composite price inclusive of duties does not automatically mean the excess duty was passed on. Citing a relevant case, the Tribunal clarified that such inclusive pricing does not imply coverage of excess duty. The Tribunal ruled in favor of the appellant, stating that the sale price included only the duty payable, hence no unjust enrichment existed. The appeal was allowed with consequential relief, overturning the lower authorities' decisions.

This judgment provides a detailed analysis of the concept of unjust enrichment concerning customs duty refund claims. It clarifies that a composite price inclusive of duties does not necessarily indicate passing on excess duty to buyers. The Tribunal's decision highlights the importance of differentiating between duty payable and erroneously paid duty in determining unjust enrichment. The ruling sets a precedent for similar cases where duty refund claims are disputed based on unjust enrichment principles.