2015 (2) TMI 693 - AT - Customs

Refund claim - Unjust enrichment - payment of duty under protest - Refund sanctioned but directed to credit the same to consumer welfare fund - appellant paid in pursuance to the Less Charge Demand Notice and appellant has succeeded in the adjudication and as consequential relief they became entitled for the refund. - Held that - It is clear that the provision of unjust enrichment is undoubtedly applicable on the refund of the appellant. This position has been settled in Apex Court judgment in the case of Sahakari Khand Udyog (2005 (3) TMI 116 - SUPREME COURT OF INDIA). - In the present case it is observed that out of total amount of refund of ₹ 1,16,16,072/- the appellant has been reducing the depreciation. It is obvious that the depreciated amount is booked as expenditure in the profit and loss account and the same is deemed to be passed on to any other person, therefore the undepreciated amount of duty and interest lying in the books of account is admissible for refund to the appellant as incidence of which has not been passed on to any other person. Appellant is entitled for refund of undepreciated amount of duty and interest. However, the appellant is directed to produce the documentary evidence with regard to the depreciated amount of duty and interest, as at the time of release of the refund the amount. Needless to say that the release of the refund shall be subject to the condition that the appellant shall make suitable accounting of undepreciated duty and interest by deducting the same from account head of fixed assets and documentary evidence to this effect shall be submitted to the sanctioning authority - Decided partly in favour of assessee.

Summary

Issues: Appeal against order for refund of custom duty and interest, application of unjust enrichment principle, capitalization of refund amount in fixed assets, admissibility of refund.

Detailed Analysis:

1. Background and Appeal: The appeal challenges the order for refund of custom duty and interest totaling &8377; 1,16,16,072 paid by the appellant for import of goods. The lower authorities directed the refund to be credited to the consumer welfare fund, leading to the appeal before the tribunal.

2. Appellant's Argument: The appellant's counsel argued that the duty and interest were paid under protest, hence unjust enrichment principle under Section 27 of the Customs Act does not apply. Additionally, the amount was accounted for as fixed assets with claimed depreciation, suggesting that only the undepreciated amount should be refunded as it was not passed on to any other entity.

3. Revenue's Response: The Revenue contended that the duty and interest were not a deposit but a payment made by the appellant. Citing a Supreme Court judgment, they argued that capitalizing the refund amount as fixed assets and claiming depreciation indicated passing on the burden of duty. Therefore, they supported the lower authorities' decision to credit the refund to the consumer welfare fund.

4. Tribunal's Decision: The tribunal observed that the duty and interest were paid as per a demand notice, making it refundable under Section 27 of the Customs Act. Referring to the provision, the tribunal agreed that the unjust enrichment principle applied. However, it acknowledged the appellant's argument regarding the undepreciated amount not being passed on, allowing a refund for that portion.

5. Refund Determination: The tribunal held that the appellant was entitled to a refund of the undepreciated amount of duty and interest. The appellant was instructed to provide documentary evidence of the depreciated amount, and upon verification, the refund would be released. The tribunal emphasized the need for proper accounting treatment of the undepreciated amount from fixed assets.

6. Conclusion: The tribunal partially allowed the appeal, granting a refund for the undepreciated portion of the duty and interest. The decision highlighted the importance of demonstrating the undepreciated amount and ensuring proper accounting treatment for the refund.

This detailed analysis captures the key arguments, legal principles, and the tribunal's decision regarding the refund of custom duty and interest in this case.