2016 (6) TMI 145 - AT - Customs

Withholding of refund due - Unjust enrichment - Held that - Doctrine of unjust enrichment was embedded to the customs law with effect from 13.7.2006. The law in force at the time of import was not subject to such provision. - when the law on levy and the remedial measure of law at the time of import was known to both sides at the time of occurrence of the event i.e. import, in absence of provision to the contrary, respondent was out of purview of test of unjust enrichment. - Decided against the revenue

Summary

Issues involved: Unconstitutionality of levied cess, Doctrine of unjust enrichment, Burden of proof regarding unjust enrichment.

Unconstitutionality of levied cess: The judgment discusses a case where a cess was levied during adjudication, which was later deemed unconstitutional and not leviable by the Apex Court. The court refers to the case of Commissioner of Central Excise Vs. Tata Iron and Steel Co. Ltd. where it was held that what is not due to the State should not be collected. The Hon’ble Supreme Court's decisions in cases like Salonah Tea Company Ltd. Vs. Superintendent of Taxes and Commissioner Vs. ITC Ltd. are also cited to emphasize that amounts not due to the State should not be collected.

Doctrine of unjust enrichment: The judgment highlights the incorporation of the doctrine of unjust enrichment into customs law from 13.7.2006. It notes that the law in force at the time of import did not include this provision. The court reasons that since both parties were aware of the law on levy and remedial measures at the time of import, and in the absence of any contrary provision, the respondent cannot be subjected to the test of unjust enrichment. Therefore, the court concludes that there is no basis for withholding a refund due to the respondent when the cess was not realizable from it.

Burden of proof regarding unjust enrichment: The judgment dismisses the Revenue appeal on the grounds of unjust enrichment by the State in case of refund denial. It further states that in the absence of a provision regarding the presumption of the burden of proof of unjust enrichment by the assessee, the respondent cannot be compelled to discharge the burden of proof. The court's decision is based on the principles of judicial discipline and the lack of specific provisions regarding unjust enrichment burden of proof.

The judgment ultimately upholds the principle that what is not due to the State should not be collected, emphasizing the importance of the doctrine of unjust enrichment and the burden of proof in such cases. It provides clarity on the implications of unconstitutional levies and the application of legal provisions in the context of refunds and unjust enrichment in customs law.