2013 (9) TMI 389 - AT - Customs

Refund of duty assessee raised invoice of the imported goods in terms of EURO - but in the bill of entry, the currency was mentioned as Great Britain Pound and value of the goods was converted into Indian currency- whether before filing the refund claim of the excess duty paid due to wrong application of exchange rate, the assessment order was required to be challenged Held that - before filing of the refund it was not required for the assessee to challenge the assessment order - the order upholding the rejection of the refund claim was not sustainable and was liable to be set aside court followed AMAN MEDICAL PRODUCTS LTD. Versus COMMISSIONER OF CUSTOMS, DELHI (2009 (9) TMI 41 - DELHI HIGH COURT) - the purpose of filing refund the assessment order was not required to be challenged when higher duty was paid due to inadvertence - higher duty had been paid due to wrong application of exchange rate which was due to clerical error. Unjust enrichment - the matter was remanded to the Commissioner (Appeals) for examining the unjust enrichment angle and if the assessee produced convincing evidence that the incidence of duty whose refund was claimed by them had not been passed on by them - they would be eligible for refund decided in favour of assessee.

Summary

Issues:
1. Refund claim on excess duty paid due to wrong application of exchange rate.
2. Requirement to challenge assessment order before filing refund claim.
3. Applicability of principle of unjust enrichment.

Analysis:
1. Refund Claim on Excess Duty Paid:
The case involved the appellants importing electronic components and paying duty based on a clerical error where the currency was wrongly mentioned as Great Britain Pounds instead of EURO. This led to a higher duty payment. The appellants filed a refund claim for the excess amount paid. The Assistant Commissioner rejected the claim citing non-challenge of the assessment order and lack of evidence on unjust enrichment. The Commissioner (Appeals) upheld the rejection primarily due to non-challenge of the assessment order. The appellant argued that the clerical error should not require reassessment as per precedents like Tata Iron & Steel Co. Ltd. and Celcius Refrigeration Pvt. Ltd. where such errors were rectified under Section 154 of the Customs Act, 1962. The Tribunal agreed, stating that the assessment order challenge was not necessary in this context, and the claim was not hit by unjust enrichment.

2. Requirement to Challenge Assessment Order:
The Tribunal clarified that in cases of clerical errors like the one in question, where higher duty was paid due to wrong exchange rate application, challenging the assessment order before filing a refund claim was not mandatory. Precedents and the Customs Act provisions supported this stance, emphasizing that such errors could be rectified without reassessment. The Tribunal differentiated this scenario from cases requiring assessment order challenge, thereby setting aside the rejection based on non-challenge of the assessment order.

3. Applicability of Unjust Enrichment Principle:
While the Commissioner (Appeals) did not delve into the unjust enrichment aspect, the Tribunal remanded the matter for further examination. The Tribunal directed the Commissioner (Appeals) to assess whether the duty incidence claimed for refund had been passed on by the appellants to their customers. If the appellants could provide convincing evidence that the duty burden was not transferred, they would be eligible for the refund. This step ensured compliance with the principle of unjust enrichment as per legal precedents and the Apex Court's judgments.

In conclusion, the Tribunal set aside the impugned order, remanding the case for a detailed assessment of the unjust enrichment aspect. The decision highlighted the correct approach to rectifying clerical errors in duty payments and underscored the importance of providing evidence to establish non-passing of duty burden to customers for refund eligibility.