2010 (4) TMI 428 - HC - Customs

Refund- Unjust enrichment- The respondent assessee had imported certain machinery on payment of duty. However it subsequently found that the said goods were exempted from customs duty by virtue of notification dated 2-6-1998. Therefore the respondent-assessee filed an application for refund of the amounts mistakenly paid as duty. Exemption allowed in Order-in-Appeal but refund rejected on unjust enrichment. Tribunal order noting that duty amount not collected from customers and mistakenly paid by respondent and unjust enrichment not arise. Held that- Tribunal is correct.

Summary

Issues:
- Whether the refund claim made by the respondent is not covered by 'unjust enrichment'?
- Whether the respondent has discharged its burden in passing on liability directly or indirectly to another person?

Analysis:
1. The appeal challenges the final order passed in Appeal No. C/323/2002 dated 3-8-2005. The respondent imported machinery, paid duty, and later found the goods were exempted from customs duty. An application for refund was filed, rejected by the Deputy Commissioner, but allowed by the Commissioner [Appeals] with a direction to pay to the Consumer Welfare Fund due to unjust enrichment. The Tribunal held no unjust enrichment and allowed the appeal.

2. The revenue argued that the refund application couldn't be considered without challenging the final assessment order. They claimed unjust enrichment due to duty paid and subsequent exemption. The respondent argued that as no appeal was filed against the exemption granted, the appeal was not maintainable. The Tribunal found no unjust enrichment as duty wasn't collected from customers.

3. The High Court noted that the machinery was for captive consumption, not for sale, so no duty was collected from customers. Rulings cited by the revenue were deemed inapplicable. The Court upheld the Tribunal's decision that there was no unjust enrichment and dismissed the appeal in favor of the respondent-assessee.