2017 (1) TMI 403 - AT - Customs

Rejection of refund claim - Advance Licence scheme - unjust enrichment - whether the Appellants are entitled to refund of the provisional amount deposited towards duty and interest under the four different challans? - Held that - the exempt material was not sold in the local market and were used in the manufacture of exported goods and the question of passing the incidence does not arise. The Government of India refunds/rebates that duty paid either on the raw material or on the finished goods exported by the exporter. The Government of India, as a matter of policy, allows the return of the duty paid on the raw material used in the manufacture of export product. This clearly indicates that the Government does not want the exporter to suffer by exporting the goods. In view thereof, we find that there is no question of unjust enrichment arises. The certificate of the Chartered Accountant produced by the Appellants and the Balance Sheet of the Appellants produced on the record for the period 1997-2009 with corresponding ledger accounts, clearly show that the amount shown by the Appellants as deposit in their books of account - there is no question of passing of incidence to any other person arises. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Entitlement to refund of the provisional amount deposited towards duty and interest.
2. Requirement of original documents for processing the refund claim.
3. Applicability of the doctrine of unjust enrichment.

Issue-wise Detailed Analysis:

1. Entitlement to Refund of the Provisional Amount Deposited Towards Duty and Interest:
The Appellants, merchant exporters, had provisionally deposited amounts towards duty and interest for two advance licenses due to non-fulfillment of export obligations within the specified time. They later fulfilled the export obligations and sought a refund of the deposited amounts. The adjudicating authority and the Commissioner (Appeals) rejected the refund claims, citing non-production of original documents. However, the Tribunal noted that the challans indicated the amounts were deposited provisionally as per Public Notice no.197/96 and were linked to the advance licenses. The Tribunal found no dispute regarding the discharge of export obligations and the logging of the DEEC book, which supported the Appellants' claim. The Tribunal concluded that the Appellants were entitled to the refund as the amounts were deposited in compliance with the DGFT's directions and no duty was payable on the imported goods under the advance licenses.

2. Requirement of Original Documents for Processing the Refund Claim:
The lower authorities rejected the refund claims due to the non-production of original Bills of Entry, customs attested invoices, and packing lists. The Tribunal, however, found that the original challans were produced before the Commissioner (Appeals) and that the DEEC book logging indicated compliance with the relevant import/export documentation. The Tribunal opined that in the peculiar facts of the case, the originals of triplicate Bills of Entry and customs attested invoices and packing lists were not relevant for the refund claim. The Tribunal emphasized that the procedural requirement of submitting original documents should not override the substantive entitlement to the refund, especially when the amount deposited was undisputedly linked to the advance licenses.

3. Applicability of the Doctrine of Unjust Enrichment:
The Appellants argued that the doctrine of unjust enrichment did not apply as the exempt material was used in the manufacture of export goods, and no duty was passed on to any other party. They provided a Chartered Accountant's certificate and balance sheets showing the amounts as recoverable from Customs Authorities. The Tribunal found no evidence that the exempt material was sold or transferred in the domestic market or that the incidence of duty was passed on. The Tribunal relied on precedents indicating that the doctrine of unjust enrichment does not apply in cases where the duty paid is refunded as part of the government's policy to not burden exporters with taxes. The Tribunal concluded that the Appellants had not passed on the incidence of the deposited amount, and thus, the doctrine of unjust enrichment was not applicable.

Conclusion:
The Tribunal set aside the impugned orders and allowed the appeals with consequential relief, emphasizing that the procedural requirements should not hinder the substantive right to a refund, especially when the export obligations were fulfilled, and the amounts deposited were undisputedly linked to the advance licenses. The Tribunal also highlighted that the doctrine of unjust enrichment did not apply in the present case, supporting the Appellants' entitlement to the refund.

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