2021 (6) TMI 713 - AT - Customs

Refund of pre-deposit - Unjust Enrichment - Amount credited to the Consumer Welfare Fund - Concessional rate of duty on the goods imported - Approval of the proposition that discharge of duty liability in full - HELD THAT - There can be no two opinions that the law, as it stood then, prescribed the deposit of the disputed amount as pre-condition for submitting to the jurisdiction of the Tribunal. It is also unambiguously clear that this requirement could be whittled down only on specific direction of the Tribunal upon consideration of plea of hardship and subject to terms and conditions for safeguarding revenue. Safeguarding the interest of revenue, and, not unnaturally, considering that empowered authority did, in the present dispute, re-determine the duty liability and imposed penalty, is the underlying intent of this prescription - If the proposition of the lower authorities is to be accepted, remittance of duty would be pre-deposit only for those who could satisfy the Tribunal that such payment caused undue hardship or who were prepared to perjure themselves with claims that may not have withstood the scrutiny of the Tribunal. The attempt to persuade us that this absurdity has been legislatively intended does not evoke resonance from us. It would not be wrong to posit that predeposit is contingent not upon orders of the Tribunal but on carrying disputes to the Tribunal. The position adopted in the impugned order that the original authority was, in discarding the claim of the appellant that the payment of differential duty was pre-deposit, is not incorrect cannot be affirmed as legal and proper - the competent authorities are directed to ensure compliance with circular no. 984/8/2014-CX dated 16th September 2014 of Central Board of Excise Customs for disposal of the refund without fail and without delay. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether the payment of differential duty by the appellant qualifies as a pre-deposit under section 129E of the Customs Act, 1962.
2. Whether the appellant is entitled to a refund of the differential duty paid, considering the doctrine of unjust enrichment.

Issue-Wise Detailed Analysis:

1. Pre-Deposit Qualification under Section 129E:
The appellant, M/s National Organic Chemical Industries Ltd, challenged the order-in-appeal which dismissed their claim for a refund of differential duty paid. The appellant argued that their payment of differential duty was a pre-deposit under section 129E of the Customs Act, 1962, made to pursue appellate remedies without awaiting the culmination of the appellate process. They contended that this pre-deposit should not be subjected to the doctrine of unjust enrichment. The Tribunal noted that the appellant had paid the differential duty to comply with the statutory pre-requisite for appealing, and not as an acceptance of the duty liability. The Tribunal referred to the provisions of section 129E, which mandates the deposit of disputed amounts as a pre-condition for submitting to the jurisdiction of the Tribunal, and emphasized that this requirement could be waived only upon specific direction by the Tribunal in cases of undue hardship. The Tribunal also cited the decision in Ghaziabad Ship Breakers Ltd, which clarified that the deposit under section 129E does not require an order from the appellate authority and is a pre-condition for entertaining the appeal.

2. Entitlement to Refund and Doctrine of Unjust Enrichment:
The appellant sought a refund of the differential duty paid, arguing that they had borne the incidence of duty and had not passed it on to any other person. The lower authorities had rejected their claim on the grounds of unjust enrichment, stating that the appellant had not provided sufficient evidence to prove that the duty incidence had not been passed on. The Tribunal referred to the statutory provisions and judicial precedents, including the decision in Mafatlal Industries Ltd, which established that the test of unjust enrichment must be applied to refund claims. However, the Tribunal noted that pre-deposits are excluded from this test, as clarified by the Central Board of Excise & Customs in circular no. 984/8/2014-CX. The Tribunal concluded that the lower authorities' position that the payment of differential duty was not a pre-deposit was incorrect. Consequently, the Tribunal directed the competent authorities to comply with the circular and process the refund without delay.

Conclusion:
The Tribunal allowed the appeal, holding that the payment of differential duty by the appellant qualified as a pre-deposit under section 129E of the Customs Act, 1962, and should not be subjected to the doctrine of unjust enrichment. The Tribunal directed the authorities to process the refund in accordance with the relevant circular.