2012 (11) TMI 154 - AT - Customs

Refund - principle of unjust enrichment Held that - Provisions of unjust enrichment will not apply to the refund claims arising out of finalisation of provisional assessment under Section 18 of the Customs Act, 1962, prior to 13-7-2006 - finalisation of the provisional assessment took place prior to 13-7-2006 and letters claiming the amounts were also filed prior to 13-7-2006 refund allowed in favor of assessee

Summary

Issues Involved:
1. Validity of the Advance Licence.
2. Provisional assessment and finalization of the Bill of Entry.
3. Applicability of the doctrine of unjust enrichment.
4. Refund claim and its compliance with Section 27 of the Customs Act, 1962.

Detailed Analysis:

1. Validity of the Advance Licence:
The assessee sought clearance of imported Lime Stone against an advance licence issued to another entity and transferred to them after fulfilling the export obligation. Initially, the clearance was not allowed due to an investigation into the genuineness of the licence. However, CEGAT, Mumbai later validated the licence, prompting the assessee to request the reassessment of the Bill of Entry and a refund of the duty paid.

2. Provisional Assessment and Finalization of the Bill of Entry:
The Bill of Entry was provisionally assessed, and the assessee paid the duty. The Assistant Commissioner finalized the assessment without allowing the debit in the Advance Licence due to the non-production of the original licence. The Commissioner (Appeals) later held that the assessee was eligible for the benefit of the relevant notification and directed the finalization of the provisional assessment accordingly.

3. Applicability of the Doctrine of Unjust Enrichment:
The adjudicating authority initially rejected the refund application, applying the doctrine of unjust enrichment based on the Supreme Court judgment in Sahakari Khand Udyog Mandal Ltd. The first appellate authority, however, allowed the refund, concluding that the doctrine was not applicable in this case.

4. Refund Claim and Compliance with Section 27 of the Customs Act, 1962:
The assessee argued that the refund claim arose from the finalization of a provisional assessment and thus was not subject to the doctrine of unjust enrichment. They cited judgments from the Supreme Court and the High Court of Gujarat to support their position. The assessee also provided a Chartered Accountant's certificate indicating that the incidence of duty was not passed on to customers.

Judgment Analysis:
The Tribunal considered the submissions and found that the first appellate authority had correctly decided the issue based on the cost accountant's certificates and other records. The Tribunal emphasized the legal principle that refunds consequent upon the finalization of provisional assessments do not attract the doctrine of unjust enrichment, as established in the Supreme Court judgments in Allied Photographic India Ltd. and Mafatlal Industries Ltd.

The Tribunal also referred to the Gujarat High Court's decision in Hindalco Industries Ltd., which clarified that the principles of unjust enrichment under Section 27 of the Customs Act do not apply to provisional assessments under Section 18 before the amendment effective from 13-7-2006. Since the finalization of the provisional assessment and the refund claim in this case occurred before this date, the Tribunal held that the doctrine of unjust enrichment was not applicable.

Conclusion:
The Tribunal upheld the first appellate authority's decision, rejecting the Revenue's appeal and allowing the assessee's cross objection. The Tribunal confirmed that the refund claim arising from the finalization of the provisional assessment was not subject to the doctrine of unjust enrichment, and the assessee was entitled to the refund.