2009 (11) TMI 318 - HC - Customs

Refund- Unjust enrichment- The first petitioner set up a unit for processing plastic scrap at Falta Export Processing Zone. On the basis of the circular no.38/2000-Cus the customs asked it to pay countervailing duty duty was assessed provisionally this circular was quashed Held that - importer were not in a position to pass on and did not actually pass on, the countervailing element of the duty to any third party no unjust enrichment refund along with interest allowed

Summary

Issues Involved:
1. Refund of countervailing duty amounts paid by petitioners.
2. Release of provisional duty bond.
3. Application of the principle of unjust enrichment.
4. Entitlement to interest on refunded amounts.
5. Directives to the respondents for refund and release of bonds.

Refund of Countervailing Duty Amounts Paid:
The petitioners sought a mandamus for the refund of amounts paid as countervailing duty based on a circular dated May 10, 2000. The first petitioner, operating a unit for processing plastic scrap, challenged the circular through a court order, resulting in its quashing. Despite depositing the duty for goods clearance, the petitioners claimed a right to refund and release of the provisional duty bond. The court found the petitioners entitled to the refund as they were unable to pass on the duty element due to provisional assessment. The court ordered the respondents to refund all amounts paid with interest.

Release of Provisional Duty Bond:
The petitioners also sought the release of the provisional duty bond submitted in connection with the countervailing duty liability. The court, considering the quashing of the circular and the petitioners' inability to pass on the duty element, directed the respondents to release all provisional duty bonds executed by the petitioners.

Application of the Principle of Unjust Enrichment:
The petitioners argued that the principle of unjust enrichment, as recognized by an amendment in 2006, should not apply to their case. They contended that they did not pass on the countervailing duty to any third party due to provisional assessment. Citing a previous judgment, the court agreed with the petitioners, stating that the refund would not unjustly enrich them, as they were not in a position to pass on the duty element.

Entitlement to Interest on Refunded Amounts:
The court held that the petitioners were entitled to interest from the date the circular was quashed, creating an obligation for the respondents to refund the amounts paid. The court ordered the refund with interest at a rate of 12% per annum from October 16, 2001, until the actual payment date.

Directives to the Respondents for Refund and Release of Bonds:
In conclusion, the court allowed the petition, directing the respondents to refund all amounts paid as countervailing duty with interest and release all provisional duty bonds within three weeks from the date of communication. No costs were awarded in the judgment.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by the parties, and the court's findings and directives in a comprehensive manner.