2013 (11) TMI 448 - HC - Customs

Refund of deposit - Applicability of Section 27 of the Customs Act, 1962 - Unjust enrichment - Held that - Additional Solicitor General submits that as per the order passed by the adjudicating officer as well as the appellate authority, certificate of the Chartered Accountant was not filed. The said observations are factually incorrect because in the grounds of appeal preferred before the first appellate authority the respondent had referred to certificate dated 18th January, 2006 of M/s Obhrai Kataria and Associates, Chartered Accountants. Along with the certificate they had also filed copy of the balance sheet that tax of ₹ 5 crores had not been passed on to the buyers and, therefore, the principle of unjust enrichment was not applicable. The factual finding of the tribunal is correct - The deposit made along with interest will be released to the respondent within ten days - Decided against Revenue.

Summary

Issues: Interpretation of Section 27 of the Customs Act, 1962; Admissibility of ad hoc payments during investigation; Application of the principle of unjust enrichment; Factual correctness of certificate of Chartered Accountant.

Interpretation of Section 27 of the Customs Act, 1962:
The judgment delves into the interpretation of Section 27 of the Customs Act, 1962, regarding the coverage of duty payments made by the assessee. The Additional Solicitor General argued that the deposit made may fall under Section 27, encompassing payments made irrespective of an assessment order. However, the court refrained from addressing this issue, noting tribunal decisions suggesting that ad hoc payments during investigations may not be covered under the unamended provisions of Section 27. The court referenced decisions by the Bombay High Court and the Supreme Court supporting this view. The judgment emphasized that the amended provisions were not under consideration.

Admissibility of ad hoc payments during investigation:
The court examined the admissibility of ad hoc payments made by the respondent between specific periods concerning imports and show cause notices. It was established that the duty incidence was not transferred to consumers or third parties, as the imports predated the notices. The respondent substantiated this claim with a balance sheet and a Chartered Accountant's certificate, meeting the burden of proof under Section 28B of the Customs Act, 1962. The tribunal's factual finding that the Chartered Accountant's certificate was filed was deemed correct, contrary to the Additional Solicitor General's assertion. The court upheld the tribunal's decision based on these factual and legal considerations.

Application of the principle of unjust enrichment:
The judgment addressed the application of the principle of unjust enrichment in the context of the case. The respondent's submission, supported by a Chartered Accountant's certificate and a balance sheet, demonstrated that the duty amount had not been passed on to buyers, thereby rendering the principle of unjust enrichment inapplicable. The court acknowledged the factual accuracy of the tribunal's findings in this regard, affirming that the duty incidence had not been shifted to customers, leading to the dismissal of the appeal.

Factual correctness of certificate of Chartered Accountant:
A crucial aspect of the judgment involved the assessment of the factual correctness of the Chartered Accountant's certificate provided by the respondent. The court scrutinized the submission of the certificate along with the balance sheet, highlighting that the tax amount had not been transferred to buyers, thus negating the application of unjust enrichment. The court validated the tribunal's factual determination regarding the filing of the Chartered Accountant's certificate, reinforcing the decision to dismiss the appeal. The judgment concluded by ordering the release of the deposit with interest to the respondent within a specified timeframe, emphasizing the adherence to factual and legal considerations in the resolution of the case.