2024 (12) TMI 1414 - AT - Customs

Refund of customs duty claimed by the appellants in respect of goods which are not unloaded at the port of import - Requirement to examine the element of unjust enrichment - proper examination on the basis of documentary evidences submitted by the appellants and as required under Section 18/27 of the Customs Act, 1962 or not. Whether the refund of customs duty claimed by the appellants in respect of goods which are not unloaded at the port of import is admissible? - HELD THAT - The issue of refund of customs duty is arising on account of excess duty collected on the total quantity of goods/LNG proposed to be imported by the appellants as per Bill of Lading, as against the actual quantity of imported goods/LNG discharged by the vessel. The facts of the case are not disputed by Revenue that as against the quantity estimated to be discharged at the time of initial filing of B/L and B/E for which total duty was paid them on provisional basis, the actual quantity discharged was less by 311837.03 MMBTU - Goods not unloaded and exported back do not qualify as 'imported goods' under the Customs Act, 1962. Whether the element of unjust enrichment is required to be examined, and if so, whether these have been properly examined based on documentary evidence submitted by the appellants as required under Section 18/27 of the Customs Act, 1962? - HELD THAT - The appellants have submitted the complete details of Annual accounts with suitable explanation in terms of Note 12 and 18 to state that amount of refund claim on account of various issues have been duly shown in the balance-sheet under the head Assets (non-current assets and current assets) and further, they have not passed on the duty burden to any other person, on the quantity of LNG which was not unloaded and the duty was initially paid provisionally for total quantity - the various details including ledger accounts, Chartered Accountant s certificate dated 18.06.2013, 06.07.2013 08.04.2014 have to be read together with complete financial records submitted, in order to arrive at whether the elements of unjust enrichment have been fulfilled or not. The refund of duty arising on account of the present case as decided by the original authority in his order dated 26.11.2013 is arising on account of short landing of the goods / quantity not unloaded, as against the proposed quantity of import of LNG by the appellants. It is also a fact not disputed by the Revenue, that the entire quantity of the goods 1960086.950 MMBTU 85,000 cubic meters of LNG proposed for import by the appellants RGPPL, in actual terms only 311837 MMBTU 12844.651 cubic meters were unloaded at the port of import - the question of applicability of Section 12 ibid on the goods which were not at all unloaded and eventually exported back should have been examined by the authorities below at the time of final assessment of customs duty under Section 17(5) ibid or at the time of first appeal before the learned Commissioner (Appeals) - principle of unjust enrichment does not apply to goods that have not been unloaded and were exported back. There is force in argument made by the learned Advocate for the appellants that in respect of provisional assessment of duty, pending discharge of the imported goods, and when the entire quantity has not been actually discharged, the claim of unjust enrichment does not apply to such cases of goods not unloaded/short landed. Conclusion - Goods not unloaded and exported back do not qualify as 'imported goods' under the Customs Act, 1962. Principle of unjust enrichment does not apply to goods that have not been unloaded and were exported back. The issue needs to be examined in detail. The impugned order is set aside and the appeal is allowed by way of remand for fresh adjudication of the case by the learned Commissioner (Appeals).

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the refund of customs duty claimed by the appellants in respect of goods which are not unloaded at the port of import is admissible?
• Whether the element of unjust enrichment is required to be examined, and if so, whether these have been properly examined based on documentary evidence submitted by the appellants as required under Section 18/27 of the Customs Act, 1962?

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Refund of Customs Duty for Non-Unloaded Goods

• Relevant Legal Framework and Precedents: The legal framework revolves around Sections 18 and 27 of the Customs Act, 1962. The Tribunal also referenced precedents such as Petronet LNG Ltd. Vs. Commissioner of Customs, Ahmedabad and Commissioner of Customs, Ahmedabad Vs. Hazira LNG Pvt. Ltd.
• Court's Interpretation and Reasoning: The Tribunal noted that the goods not unloaded do not constitute 'imported goods' under Section 2(25) of the Customs Act, 1962. The Tribunal emphasized that the refund of customs duty should be considered for goods that were not unloaded and were exported back.
• Key Evidence and Findings: The Tribunal relied on the factual position evidenced by the Survey Report and the Chartered Accountant's certificates. The Tribunal noted that only a portion of the LNG was unloaded, and the balance was exported back.
• Application of Law to Facts: The Tribunal applied the definition of 'imported goods' and determined that the LNG not unloaded does not qualify as such, thus questioning the applicability of Section 12 of the Customs Act to these goods.
• Treatment of Competing Arguments: The Tribunal considered the arguments from both the appellants and the respondent, ultimately finding merit in the appellants' argument that unjust enrichment does not apply to goods not unloaded.
• Conclusions: The Tribunal concluded that the refund claim should be reassessed, taking into account the legal provisions and the nature of goods not unloaded.

Issue 2: Examination of Unjust Enrichment

• Relevant Legal Framework and Precedents: Section 27 of the Customs Act, 1962, which deals with the refund of duty, and the concept of unjust enrichment.
• Court's Interpretation and Reasoning: The Tribunal noted that the original authority had sanctioned the refund but credited it to the Consumer Welfare Fund due to a lack of evidence on unjust enrichment. However, the Tribunal found that the appellants provided sufficient documentation to prove that the duty burden was not passed on.
• Key Evidence and Findings: The Tribunal examined the Chartered Accountant's certificates, ledger accounts, and financial records that indicated the duty burden was not transferred to another party.
• Application of Law to Facts: The Tribunal applied the principles of unjust enrichment, determining that the appellants had adequately demonstrated that they did not pass on the duty burden.
• Treatment of Competing Arguments: The Tribunal addressed the respondent's assertion of unjust enrichment but found the appellants' documentary evidence compelling.
• Conclusions: The Tribunal concluded that the issue of unjust enrichment was not applicable to the non-unloaded goods, and the refund should be reassessed accordingly.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning:

"...the goods not unloaded do not bear the character of imported goods in terms of the definition of 'imported goods' under Section 2(25) of the Customs Act, 1962."

"...the question of applicability of Section 12 ibid on the goods which were not at all unloaded and eventually exported back should have been examined by the authorities below..."

Core Principles Established:

• Goods not unloaded and exported back do not qualify as 'imported goods' under the Customs Act, 1962.
• The principle of unjust enrichment does not apply to goods that have not been unloaded and were exported back.

Final Determinations on Each Issue:

• The Tribunal set aside the impugned order and allowed the appeal by way of remand for fresh adjudication, instructing a detailed examination of the refund claim concerning the non-unloaded goods.
• The Tribunal directed that the issue of unjust enrichment be reassessed, taking into account the evidence provided by the appellants.