2014 (5) TMI 826 - AT - Customs

Refund of pre deposit - Unjust enrichment - Bar of limitation - Held that - doctrine of unjust enrichment would come into operation only subsequent to the stage the refund claim is held to be sanctionable. Furthermore, the doctrine of unjust enrichment cannot be a ground for rejecting the refund claim. Undisputedly, the assessments were provisional in this case and they were finalised on 9-1-2007 after various rounds of litigation. As per Rule 18(2) of the Customs Act, 1962, the date of final assessment cannot be taken as 1996 when the first Order-in-Original was passed since the same was under challenge which was finally resolved by the Commissioner (Appeals) vide order dated 9-1-2007 whereby he finally upheld the case in favour of the appellant, which has not been challenged by the department. Under these circumstances, refund of pre-deposit cannot be held to be time bar. There is no other ground for rejecting the refund of pre-deposit. Therefore, we find that the same is sanctionable, so far as unjust enrichment is concerned. The period involved is prior to 2006 - Decided in favour of assessee.

Summary

Issues:
1. Time bar and unjust enrichment in rejecting the refund claim.

Analysis:
The case involved appeals against the Order-in-Appeal where the ld. Commissioner (Appeals) dismissed the appeal filed by the appellants. The issue revolved around the valuation of imported umbrella cloth panels declared as components of an umbrella. The lower adjudicating authority had enhanced the value by 20% and appropriated the revenue deposit. The Commissioner (Appeals) set aside the Order-in-Original and remanded the matter back to the adjudicating authority multiple times. The appellant's refund claim was rejected on the grounds of time bar and unjust enrichment by the lower adjudicating authority and the Commissioner (Appeals).

The appellant contended that the assessment was finalized in July 2008, within the time limit prescribed under Section 27 of the Customs Act, 1962, and that the principles of unjust enrichment did not apply to provisional assessments made before 13-7-2006. They argued that they were entitled to a refund of the deposit made for provisional assessment. The appellant also highlighted that no appellate authority had upheld the loading of value by the Dy. Commissioner of Customs between 1993 and 2003. They emphasized that the refund should have been granted without waiting for the refund application based on the Hindustan Lever Ltd. case.

The Tribunal considered the submission and record, noting that the assessments were provisional and finalized in 2007 after various litigations. The Tribunal clarified that the doctrine of unjust enrichment should only apply after a refund claim is deemed sanctionable. Referring to the Hindustan Lever Ltd. case, the Tribunal held that the appellant was entitled to the refund without the application of the detailed procedure under Section 11B of the Central Excise Act, 1944. Consequently, the Tribunal set aside the Commissioner (Appeals) decision and allowed the appeals with any consequential relief as per the law.

In conclusion, the Tribunal found in favor of the appellant, setting aside the decision of the Commissioner (Appeals) and allowing the appeals with any consequential relief as per the law.