2008 (3) TMI 423 - HC - Customs

Refund of customs duty finalization of provisional assessment - applicability of principal of doctrine of unjust enrichment Held that - Since section 18 of the Customs act, 1962 was amended with effect from 13-7-2006, the same can not be applied for refund pertaining to the period prior to 13-7-2006 - the doctrine of unjust enrichment is not applicable to provisional assessment even after the same is finalized. provisions of section 27(2) and (3) are not applicable where the refund is arises due to finalization of provisional assessment.

Summary

Issues Involved:
1. Appeal challenging refund of excise duty credited to Consumer Welfare Fund.
2. Dispute over concessional rate of duty claimed by the respondent.
3. Tribunal's decision on unjust enrichment and refund of excise duty.
4. Applicability of amended provisions of Section 18(5) of Customs Act.
5. Interpretation of Section 27(2) and (3) of the Customs Act.

Analysis:

Issue 1:
The appeal was filed by the Commissioner of Central Excise challenging the order of the Customs, Excise & Service Tax Appellate Tribunal directing the refund of excise duty amounting to Rs. 2,12,32,684 credited to the Consumer Welfare Fund. The Tribunal found that the respondent was not guilty of unjust enrichment.

Issue 2:
The dispute arose from the concessional rate of duty claimed by the respondent on imported phosphoric acid. The customs authorities provisionally assessed the bills at a standard rate of duty, leading to excess duty payment by the respondent.

Issue 3:
The Tribunal held that the respondent did not pass on the duty burden to buyers and did not receive any subsidy to offset the extra duty burden. The Tribunal concluded that unjust enrichment did not apply to provisional assessments under Section 18 of the Customs Act.

Issue 4:
The primary inquiry was whether the amended provision of Section 18(5) of the Customs Act, effective from 13-7-2006, could be applied retrospectively. The Deputy Commissioner had finalized and sanctioned the refund to the respondent in 2001, predating the amendment.

Issue 5:
Regarding the interpretation of Section 27(2) and (3) of the Customs Act, the Court held that since the refund order was passed in favor of the respondent under Section 18, Section 27 did not apply. The respondent was entitled to the refund without having to claim it.

In conclusion, the Court dismissed the appeal, affirming the Tribunal's decision to refund the excise duty to the respondent. The Court held that the respondent should be paid the refund amount along with interest within four weeks. The judgment emphasized the non-applicability of the doctrine of unjust enrichment to provisional assessments and clarified the interpretation of relevant provisions of the Customs Act in the case.