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TMI Blog2008 (9) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of the respondent importer could not be rejected by applying the principle of unjust enrichment, on the ground that the principle of unjust enrichment is not applicable to the refunds arising on the finalization of the provisional assessment under the Customs Act, 1962? (B) Whether in the facts and circumstances of the case, the doctrine of unjust enrichment under section 27 of the Customs Act, 1962 is applicable to the refunds arising out of finalization of Provisional Assessment under section 18 of the Customs Act, 1962?" 1.1 Tax Appeal No.1713 of 2007 has been admitted and following three questions have been formulated,: (i) Whether in the facts and circumstances of the case, the Tribunal is justified in holding that the principles of unjust enrichment will not apply to the cases of finalization of provisional assessment prior to the amendment to section 18 of the Customs Act, 1962 prescribed in the provisions of Section 27(2) of the Customs Act, 1962. (ii) Whether in the facts and circumstances of the case, the Tribunal is justified in allowing the refund claim on the ground that the finalization was done prior to amendment of Section 18 of the Customs Act, 1962 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R-6 challan No.1224/03-04 dated 21.02.2004. The provisional assessment was done on the basis of provisional invoice No. CC81223 dated 17.02.2004. In the metal trade, it is common knowledge that the final price of the concentrate is calculated by calculating the metal content and the prevalent price of such metal in the LME (London Metal Exchange). The Appellant in this case had contracted with the supplier on these terms which are listed in paragraph Nos.5 and 6 of the contract dated 19.01.2004. 4. After verifying the LME price at the relevant time, the final invoice No.CC8133 dated 23.04.2004 was submitted by the Appellant and the final Bill of Entry No. F-180/2003-2004 dated 22.02.2004 was submitted. On the basis of the aforesaid final invoice, the total duty payable was only Rs.1,37,13,076/-. Thus an amount of Rs.16,06,536/- became refundable to the Appellant. However, the Appellant had already availed CENVAT credit for the amount of Rs.12,38,065/- paid as additional duty of Customs (CVD) and therefore, only Rs.3,68,471/- was refundable. 5. The Adjudicating Authority vide Order-In-Original No. SRT/CUS/REF/12/2005 dated 5/5/2005 held that the respondent-assessee was entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat provisional assessment is to be made by the Adjudicating Authority if any of the eventualities stated in Section 18(1) of the Act are shown to be existing. That an importer has no vested right to claim refund of duty paid under provisional assessment and unless and until the importer shows that the excess amount of duty paid by the importer under the provisional assessment has not been passed over to any other person no prejudice can be said to have been caused to the importer if such amount of refund is credited to the Consumer Welfare Fund under section 27(2) of the Act. That doctrine of unjust enrichment is a just and salutary doctrine and no person is entitled to collect duty from the purchaser at one end and also seek refund of the same duty from the Revenue on the ground that such duty has been collected contrary to law. That the Court should not exercise its powers for unjustly benefiting a person. The decision in case of CCE Vs. Allied Photographic India Ltd.(2004) 4 SCC 34 cannot be made applicable as the same was rendered in context of provisions of Central Excise Act, 1944 and the Rules framed thereunder and therefore, the Tribunal had wrongly placed reliance on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Mafatlal Industries (supra) was continuing to hold the field in cases of refund under the Act in relation to provisional assessments. This aspect has been clarified once again by the Apex Court in the case of CCE Vs. TVS Suzuki Ltd., 2003 (156) ELT 161 (SC). That on a conjoint reading of the two decisions of the Apex Court in case of Allied Photographic (supra) and TVS Suzuki (supra) it was apparent that despite 1998 amendment and the 1999 amendment under the Act, refund arising from provisional assessment cannot be withheld on the ground of principle of unjust enrichment being applicable. That Section 18 of the Act incorporates principle of unjust enrichment only with effect from amendment of 13.7.2006. That the Mumbai High Court judgments referred to by revenue cannot be considered as the same are opposed to the principles laid down by the Apex Court. 9. The learned Advocate appearing for respondent assessee in Tax Appeal No. 1713 of 2007 apart from reiterating the submissions made by the learned Advocate for the assessee, as recorded hereinbefore, submitted that Section 18 of the Act was a complete self contained code and had an overriding effect. considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly the question as to the nature of amendment made to Section 18 of the Act vide Taxation Laws (Amendment) Act, 2006 does not arise yet for the purpose of appreciating the controversy between the parties the said issue would incidentally have to be considered: As to whether the said amendment is substantive in nature or is merely procedural, and would thus apply to pending proceedings? 11. There is no dispute on facts in any of the Appeals. In the case of Mafatlal Industries (supra) the Apex Court has observed: "B.P. Jeevan Reddy (for J.S. Verma, S.C. Agrawal, himself and A.S. Anand and B.N. Kirpal, JJ).- Significant questions concerning the refund of excise and customs duties collected contrary to law in all its shades - arise for consideration in these appeals and writ petitions. They involve the correctness of certain earlier decisions of this Court, concept of unjust enrichment, interpretation of Article 265 of the Constitution of India and of the provisions of the Central Excises and Salt Act, 1944 and the Customs Act et al. As far back as 14-8-1984, Civil Appeal No. 1794 of 1984 and the connected special leave petitions were referred to a Bench of seven Judges by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a consequence of the decision in such appeal or such other proceedings, as the case may be, would be governed by Section 11-B. It is also made clear that if an independent refund claim is filed after the final decision under Rule 9B(5) reagitating the issues already decided under Rule 9B assuming that such a refund claim lies-and is allowed, it would obviously be governed by Section 11B. It follows logically that position would be the same in the converse situation". 12. In the case of Allied Photographic the Apex Court was required to answer the question: "Whether a claim for refund after final assessment is governed by Section 11B of the Central Excise Act, 1944?" Upon a reference having been made to a Larger Bench by a two Judges Bench of the Apex Court. The points at issue have been set out in the opening part of paragraph No.6 of the judgment. For the present only the first issue is relevant, viz., whether the refund of duty paid under provisional assessment is similar to duty paid under protest as both are 'on account' payments adjustable on finalization of assessment or vacating of protest. After setting out the provisions of Section 11B of the Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he note appearing in 2004 (164) ELT A177 cannot assist the revenue. 15. Section 18 of the Act as is relevant for the present reads as under: "SECTION 18. Provisional assessment of duty. - (1) Notwithstanding anything contained in this Act but without prejudice to the provisions contained in section 46- (a) where the proper officer is satisfied that an importer or exporter is unable to produce any document or furnish any information necessary for the assessment of duty on the imported goods or the export goods, as the case may be; or (b) where the proper officer deems it necessary to subject any imported goods or export goods to any chemical or other test for the purpose of assessment of duty thereon; or (c) where the importer or the exporter has produced all the necessary documents and furnished full information for the assessment of duty but the proper officer deems it necessary to make further enquiry for assessing the duty, the proper officer may direct that the duty leviable on such goods may, pending the production of such documents or furnishing of such information or completion of such test or enquiry, be assessed provisionally if the importer or the exporter, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty. - (1) Notwithstanding anything contained in this Act but without prejudice to the provisions contained in section 46- (a) where the proper officer is satisfied that an importer or exporter is unable to produce any document or furnish any information necessary for the assessment of duty on the imported goods or the export goods, as the case may be; or (b) where the proper officer deems it necessary to subject any imported goods or export goods to any chemical or other test for the purpose of assessment of duty thereon; or (c) where the importer or the exporter has produced all the necessary documents and furnished full information for the assessment of duty but the proper officer deems it necessary to make further enquiry for assessing the duty, the proper officer may direct that the duty leviable on such goods may, pending the production of such documents or furnishing of such information or completion of such test or enquiry, be assessed provisionally if the importer or the exporter, as the case may be, furnishes such security as the proper officer deems fit for the payment of the deficiency, if any, between the duty finally assessed and the duty provisionally asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to liability to pay interest or entitlement to claim interest consequent upon final assessment order. However, sub-section (5) is the material amendment which indicates that the Proviso appearing below sub-section (2) of Section 27 of the Act has now been incorporated as a part of Section 18 of the Act. On a plain reading the distinction between Section 18 as it stood prior to amendment i.e. upto 12.7.2006 and subsequent to the amendment i.e. with effect from 13.7.2006 becomes apparent. The difference is stark and revealing and it is not possible to agree with the contention of revenue that such amendment has to be understood as clarificatory in nature. This is more so, when one reads the amendments made in 1998 and the amendment made in Rule 9B of the Central Excise Rules in 1999 considering the pronouncement of the Apex Court as to the distinction between making of a refund and claiming of a refund; the amendment cannot be considered to be retrospective in nature; and cannot be made applicable to pending proceedings. 19. This can be considered from a slightly different angle. While introducing the Taxation Laws (Amendment) Bill, 2005 (Bill No. 74 of 2005) the Notes on Claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, on both counts, in light of the authorities referred to hereinbefore, and on interpretation of provisions of Section 18 of the Act, on finalisation of assessment if any excess duty is found to have been paid at the time of provisional assessment Revenue is bound in law to make the refund without any claim being required to be made by an assessee. This would be the position in law upto 12.7.2006 and not thereafter. 22. In the circumstances, on none of the grounds pleaded can the revenue succeed. Therefore, principles of unjust enrichment found in Section 27 of the Act cannot be read into the provisions of Section 18 of the Act without considering and applying the amendment to Section 18 with effect from 13.7.2006. The Appeal is accordingly dismissed with no order as to costs. OJCA No. 190 of 2006. In light of the order made in the Appeal today, this Civil Application is rejected as having become infructuous. Notice discharged. TAX APPEAL No. 1713 of 2007. In light of the judgment rendered today in Tax Appeal No. 638 of 2006 between the same parties, this Appeal is accordingly dismissed with no order as to costs. TAX APPEAL No. 1047 of 2008. It is not pos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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