2013 (9) TMI 587 - AT - Customs

Refund of duty interest, redemption of fine applicability of principle of unjust enrichment - appellant made a pre-deposit which was later on appropriated towards fine and penalty - when the fine and penalty were set aside - Court relied upon United Spirits Ltd. CC, Mumbai (2009 (6) TMI 23 - BOMBAY HIGH COURT) principles of unjust enrichment does not arise in a case of redemption fine - No authority had been brought to our attention by either side where the principles of unjust enrichment have been applied insofar as the fine or penalty is concerned - both on general principles and considering that the itself imposes restriction only on refund of duty under Section 28, it would not be possible to attract the principles of unjust enrichment refund of excess redemption fine paid to be allowed decided in favour of assessee.

Summary

Issues:
1. Applicability of the principle of unjust enrichment to refund of pre-deposit appropriated towards fine and penalty.
2. Interpretation of Section 28D of the Customs Act in the context of refund.
3. Comparison of the present case with the judgment in Sahakari Khand Udyog Mandal case.
4. Analysis of the judgment in United Spirits Ltd. case regarding unjust enrichment in redemption fine cases.

Issue 1:
The appellant contended that the principle of unjust enrichment should not apply to the refund of a pre-deposit made towards fine and penalty, as it was not related to duty and interest. They argued that the pre-deposit was remitted and relied on previous decisions to support their stance. The Revenue, however, referred to the Sahakari Khand Udyog Mandal case, stating that evidence of not passing on the burden to customers was not provided by the appellant, making them ineligible for the refund.

Issue 2:
Section 28D of the Customs Act establishes a presumption regarding the passing on of duty to the buyer. The Tribunal noted that this section pertains to the refund of duty, while the case concerned a pre-deposit appropriated towards fine and penalty, rendering the section inapplicable to the situation.

Issue 3:
The Tribunal distinguished the facts of the present case from the Sahakari Khand Udyog Mandal case, emphasizing that the circumstances were dissimilar. In the Mandal case, the rebate was claimed based on excess production, whereas in the current matter, the appellant's pre-deposit was later refunded after the fine and penalty were set aside.

Issue 4:
Referring to the judgment in United Spirits Ltd. case, the Tribunal highlighted that the principles of unjust enrichment may not be applicable to redemption fines. The court in that case stated that unjust enrichment does not typically apply to fines or penalties. The Tribunal found the reasoning in the United Spirits Ltd. case relevant to the present matter and concluded that the appellant was entitled to a refund of the amount adjusted towards fine and penalty, along with interest.

In conclusion, the Tribunal allowed the appeal, granting the appellant the refund of Rs. 47.5 lakhs adjusted towards fine and penalty, in accordance with the law and the principles outlined in the United Spirits Ltd. case.