2016 (3) TMI 656 - AT - Customs

Refund claim - Entitling exemption under Notification No. 21/2002 dated 1.3.2002 subject to submission of essentiality certificated from the Directorate General of Hydro Carbons- Duty paid on spares imported for use on the drilling ships as there was delay in obtaining the said certificates refund claim rejected on two grounds, one is unjust enrichment and other is refunds were filed without challenging the assessment - Held that - the appellants have relied on the terms of the contract to assert that there was no unjust enrichment but the basic facts of actual transaction have not been produced. From the terms of contract it may appear that there was no unjust enrichment, but by itself it is not a sufficient evidence. The appellant should produce some reliable evidence of actual transactions as the terms of contract can only point at the possibility of unjust enrichment or otherwise but can not be treated as evidence. As the onus of proving that there was no unjust enrichment was on appellants and they have failed to discharge it. Also as per the decision of Hon ble Supreme Court in the case of CCE Vs. Flock (India) Pvt. Ltd 2000 (8) TMI 88 - SUPREME COURT OF INDIA , one is necessarily required to challenge the assessment orders to be eligible to claim refund but the appellant also failed to do so. Therefore, in failure to comply both the grounds, the appellant is not entitled to refund claim. - Decided against the appellant

Summary

Issues:
1. Refund claim of duty paid on spares imported for use on drilling ships.
2. Rejection of refunds based on unjust enrichment and failure to challenge assessment.
3. Argument regarding delay in obtaining essentiality certificates.
4. Reliance on specific legal cases to support arguments.
5. Examination of terms of contract and burden of proof on appellants.
6. Interpretation of Section 27 of the Customs Act, 1962 regarding refund claims and challenging assessment orders.

Analysis:
1. The appellant filed a refund claim for duty paid on imported spares for drilling ships, citing entitlement to exemption under Notification No. 21/2002, subject to essentiality certificates from DGH. Refunds were rejected due to unjust enrichment and failure to challenge assessments, leading to appeal before the Tribunal.

2. The appellant argued that delays by DGH and ONGC in providing certificates forced duty payment, with subsequent refund claims upon certificate receipt. They contended that burden of duty was not passed on based on contract terms. However, lack of actual transaction evidence undermined claims of no unjust enrichment.

3. The Tribunal emphasized the need for reliable evidence beyond contract terms to prove absence of unjust enrichment. The burden of proof rested on the appellants, who failed to discharge it satisfactorily, supporting the rejection of refunds on this ground.

4. Legal arguments referenced specific cases like CCE Vs. Flock India and decisions of the Hon'ble Supreme Court in cases of Raj Industries and Bhadrachalam Paperboards to support contentions regarding unjust enrichment and challenging assessment orders.

5. The Tribunal highlighted that terms of a contract, while suggestive, were not conclusive evidence of unjust enrichment. It stressed the necessity of actual transaction details to substantiate claims, which the appellants failed to provide, leading to the dismissal of the appeal on the unjust enrichment ground.

6. Regarding the interpretation of Section 27 of the Customs Act, 1962, the Tribunal rejected the appellant's argument that refund claims could be made without challenging assessment orders. Citing legal precedents, it clarified that unless assessment orders were challenged or modified through appeal, refund claims could not be sanctioned, ultimately dismissing the appeal on both counts.