1999 (9) TMI 320 - AT - Central Excise

Summary

Issues:
Appeal against order for refund of custom duty under Notification No. 195/76-Cus, misinterpretation of certificate by naval authorities, unjust enrichment principle application, rejection of refund claim by lower authorities, exemption under Notification 195/76 and 1/95, burden of duty borne by naval authorities, rejection of appeal based on purchase order and calculation of landed cost, positive evidence of duty not passed on to naval authorities.

Analysis:
1. The appellant appealed against an order for refund of custom duty under Notification No. 195/76-Cus. The appellant received a telex order for outboard motors urgently needed by the Indian Navy. Despite producing necessary documents for duty-free entry, there was a delay in clearance. The appellant decided to pay duty, claim refund later. The refund claim was rejected by lower authorities, citing unjust enrichment principle under Customs Act. The appellant argued that the duty was borne by them, not naval authorities, supported by relevant documents. The Tribunal previously allowed the refund claim, but lower authorities rejected it without proper consideration.

2. The appellant contended that the certificate issued by naval authorities was misinterpreted, leading to the rejection of the refund claim based on unjust enrichment principle. The appellant provided various documents to support their claim, including purchase orders, certificates, and correspondence with naval authorities. The lower authorities failed to consider this evidence, leading to the rejection of the refund claim. The Tribunal's previous decision supported the appellant's case under Notification 195/76, indicating no reason to reject the refund claim.

3. The main issue was whether the appeal should be allowed. The Tribunal reviewed the orders of lower authorities, correspondence, and previous Tribunal decisions. It was found that the impugned goods were entitled to exemption under Notification 1/95 as fitments to ships. The appellant had paid duty thinking to claim it back later, as confirmed by correspondence with naval authorities. The lower authorities' rejection of the refund claim was deemed improper under the circumstances.

4. The decision to reject the refund claim was based on a letter from naval authorities indicating the duty was borne by them, not the appellant. However, subsequent documents confirmed that the duty was paid by the appellant and not passed on to naval authorities. The Tribunal's previous order supported the appellant's case for duty exemption under Notification 195/76. The rejection of the refund claim by lower authorities was deemed incorrect based on the evidence presented.

5. The Commissioner (Appeals) rejected the appeal based on the purchase order's silence on custom duty and lack of separate calculation for landed cost. However, subsequent correspondence and evidence proved that the duty was paid by the appellant and not reimbursed by naval authorities. The Tribunal's decision in a different case was deemed irrelevant to the current situation. Ultimately, the Tribunal set aside the lower authorities' orders and allowed the appeal with consequential relief according to law.