2012 (12) TMI 713 - AT - Customs

Rejection of refund claim - Held that - The factual finding of collection of the amount, which has been deposited by the appellant from his customers being not disputed and is not being challenged by contrary evidence in any form, the appellant has recovered the amount of Rs.50,000/- deposited by him as penalty, from his customers. In this view, sanctioning of refund claim will doubly enrich the appellant, which is not in consonance with the law.

Summary

Issues:
Rejection of refund claim of Rs.50,000 due to unjust enrichment.

Analysis:
The appeal was against the rejection of a refund claim of Rs.50,000 paid by the appellant upon receiving Order-in-Original No.07/Addl.Commrr/2009. The appellant had appealed against the penalty, which was set aside by the first appellate authority. Subsequently, the appellant sought a refund, which was credited to the Consumer Welfare Fund due to the inability to prove unjust enrichment. The appellant contended that the amount was not duty, interest, or penalty but a deposit for the appeal process. The lower authorities upheld the decision citing the doctrine of unjust enrichment. The appellant argued against this, referencing a Supreme Court judgment and a High Court decision on a similar issue. The first appellate authority found evidence that the penalty had been passed on to another person, leading to the application of the doctrine of unjust enrichment. The appellant disputed this finding, stating that the letter to the Income Tax Department was beyond the scope of the Show Cause Notice.

The Tribunal noted that the appellant had paid the penalty amount to exercise the right of appeal successfully. The first appellate authority found evidence indicating that the penalty had been passed on to another party, justifying the application of the doctrine of unjust enrichment. The appellant's argument that the letter to the Income Tax Department was irrelevant to the Show Cause Notice was dismissed. The Tribunal observed that the appellant had collected the penalty amount from customers, and granting a refund would result in double enrichment, contrary to the law. Considering the circumstances, the Tribunal upheld the lower authorities' decision, finding it legally sound and free from defects.

In conclusion, the Tribunal rejected the appeal, affirming the decision to credit the refund to the Consumer Welfare Fund due to unjust enrichment.