9911796707
TMI Blog2009 (6) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation regarding purchase of essences from M/s Finacord Chemicals Private Limited and M/s S. R. Nagpal and Company. According to the Appellants, they cooperated with the officers and furnished whatever documents which were available. The officers required the Appellants to furnish the copies of bills of entries and the purchase orders for the essences. The Appellants could not furnish the same as they were not the importers. Subsequent thereto, the officers made out the Panchanama and Supratnama for safe custody and handed over the same to the Factory Manager of the Appellants. The Appellants made a request for release of the essences against security. However, the Officers of the Department indicated that it would not be possible. After exchange of correspondences, the Appellants opposed the seizure by filing Writ Petition No.3220/1991. An order came to be passed in terms of the minutes. This Court ordered that upon the Appellants (MDL) depositing an amount of Rs.1,56,64,500/with the Additional Collector of Customs, Mumbai, the Appellants be allowed to utilize the undenatured Ethyl Alcohol which was the subject matter of the Supratnama dated 07.10.1991. A further applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls Private Limited. The Appellants herein, therefore, were entitled to consequential relief of refund of an amount of Rs.01,05,02,087/appropriated towards the differential duty and refund of the amount appropriated towards the redemption fine in excess of Rs.10 Lakhs, in accordance with law. The order of refund was directed in favour of erstwhile Maharashtra Distilleries Limited (MDL), however, it was subsequently rectified in the name of the Appellants herein. 5. The Appellants, thereafter, made a request for the refund of Rs. 1,46,64,500/along with interest at the rate of 13% from the date of deposit i.e. 11.11.1991. Correspondence ensued between the Appellants and the Respondent. The Appellants were informed that an application for refund be made by the prescribed application, which was subsequently done by the Appellants herein. 6. Subsequent to the application, a show cause notice was served on the Appellants. On 08.02.2006 the Appellants showed cause. The Assistant Commissioner, Customs, Central Refund Cell, JNCH, Nhava Sheva sanctioned the refund of Rs.1,46,64,500/and ordered that the same should be credited to the Consumer Welfare Fund instead of being p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Central Excise Act, it has been additionally contended that the doctrine of unjust enrichment is not applicable in a case of provisional assessment and after finalization thereof. 10. On the other hand, on behalf of the Respondent, it has been submitted that the refund claim arising out of provisional assessment and finalization thereof has to stand the test laid down in Section 27 of the Customs Act, 1962. The provisions of the Customs Act, 1962 are different as compared to Rule 9(B) of the Central Excise Rules, 1944. Reliance is placed on the judgment of this Court in case of Bussa Overseas and Properties Pvt. Ltd. vs. Union of India, 2003 (158) E.L.T. 135 (Bom.), which has been confirmed by the Supreme Court and reported in 2004 (164) ELT (A) 177 (SC). Further reliance is placed on the provisions of sub section (3) of Section 18 of the Customs Act, 1962 which has been inserted by the Taxation Laws (Amendment) Act, 2006 w.e.f. 13.07.2006. It is submitted that if the refund emanates out of finalization of the provisional assessment under Section 18, the same has to be considered under Section 27 of the Customs Act, 1962. Hence, the refund if any, even consequent to finaliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edy in case of unjust enrichment in English law is generically different from the remedies in contract or in tort, and is recognized to fall within a third category of the common law which has been called quasicontract or restitution." Summing up, the Supreme Court observed "From the above discussion, it is clear that the doctrine of 'unjust enrichment' is based on equity and has been accepted and applied in several cases. In our opinion, therefore, irrespective of applicability of Section 11B of the Act, the doctrine can be invoked to deny the benefit to which a person is not otherwise entitled. Section 11B of the Act or similar provision merely gives legislative recognition to this doctrine. That, however, does not mean that in absence of statutory provision, a person can claim or retain undue benefit. Before claiming a relief of refund, it is necessary for the petitioner/appellant to show that he has paid the amount for which relief is sought, he has not passed on the burden on consumers and if such relief is not granted, he would suffer loss." 13. Following this judgment, in Sahakari Khand Udyog Mandal (supra) this Court in case of Shree Vindhya Paper Mills vs. Union of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then, the Supreme Court in case of Commissioner of Central Excise, Mumbai II vs. Allied Photographics India Limited, 2004(166) ELT 3 (SC), has taken a view that the doctrine of unjust enrichment would not apply in the case of provisional assessment and consequently Bussa Overseas (supra) stands impliedly overruled. The question is what is the law laid down in Allied Photographics India Limited (supra) and whether it would be applicable to the refund of duty or additional duty under the provisions of the Customs Act, 1962. 16. To understand the argument, we may first gainfully refer to some of the provisions under the Central Excise Act and Rules made thereunder. Rule 9B of the Central Excise Rules, 1944, as it then stood read as under:" Rule 9B: Provisional assessment to duty (1) Notwithstanding anything contained in these rules: (a) where the proper officer is satisfied that an assessee is unable to produce any document or furnish any information necessary for the assessment of duty on any excisable goods; or (b) where the proper officer deems it necessary to subject the excisable goods to any chemical or any other test for the purpose of assessment of duty thereon; or (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund, such refund shall not be made to him except in accordance with the procedure established under subsection (2) of Section 11B of the Act." It is thus clear that under sub Rule (5) under the Central Excise Act the amount in excess of the final assessment had to be refunded till the proviso was added. 17. Section 27(1) of the Customs Act, 1962 was substituted by the Central Excise and Customs Laws (Amendment) Act 40 of 1991 w.e.f. 20.09.1991 and with its subsequent amendments reads as under:10 "27. Claim for refund of duty. (1) Any person claiming refund of any [duty and interest, if any, paid on such duty]: (a) paid by him in pursuance of an order of assessment; or (b) borne by him, may make an application for refund of such [duty and interest, if any, paid on such duty] to the [Assistant Commissioner of Customs or Deputy Commissioner of Customs]: (a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, before the expiry of one year; (b) in any other case, before the expiry of six months; from the date of payment of [duty and interest, if any paid on such duty], ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (2). (4) ......... (5) ........" 18 "18. Provisional assessment of duty. (1) .......... (2) When the duty leviable on such goods is assessed finally in accordance with the provisions of this Act, then (a) in the case of goods cleared for home consumption or exportation, the amount paid shall be adjusted against the duty finally assessed and if the amount so paid falls short of, or is in excess of [the duty finally assessed] the importer or the exporter of the goods shall pay the deficiency or be entitled to a refund, as the case may be; (3) ......... (4) Subject to subsection (5), if any refundable amount referred to in clause (a) of subsection (2) is not refunded under that subsection within three months from the date of assessment of duty finally, there shall be paid an interest on such unrefunded amount at such rate fixed by the Central Government under Section 27A till the date of refund of such amount. (5) The amount of duty refundable under subsection (2) and the interest under subsection (4), if any, shall instead of being credited to the Fund, be paid to the importer or the exporter, as the case may be, if such amount it relatable to: (a) the duty and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The learned Single Judge held that the action of the Department collecting the duty not on the sale price of NIIL to M/s AGIL was illegal and, therefore, NIIL was entitled to refund. As the question of 'unjust enrichment' was debatable, the question was referred to the Full Bench. After the decision of the Full Bench, the petition was reposted, and Union of India was directed to prove that the tax burden has in fact been shifted to consumers. Pending further examination, the Department was directed to deposit the amount in Court. When the petition came for hearing, NIIL conceded that it had passed on the burden to M/s AGIL the sole selling distributors of NIIL. The refund claims of NIIL were rejected. The learned Judge directed M/s AGIL to file affidavit stating whether it had passed on the burden to its dealers or not? After further inquiry, it was held that the Union of India had failed to prove that M/s AGIL had passed on the burden to its dealers and accordingly, ordered refund of the amount. In an intra Court appeal, the Division Bench took a view that since NIIL had conceded of having passed on tax burden to M/s AGIL, the question of further examining as to whether M/s AGIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments" and therefore, he was not bound to comply with section 11(B) of the said Act. The Court noted that there is nothing in para 95 of Mafatlal (supra) to suggest that payment of duty under protest does not attract the bar of unjust enrichment. Paragraph No.104 only states that if refund arises upon finalization of provisional assessment, section 11(B) will not apply. Relying on this paragraph, it was argued that payment under protest and payment of duty under provisional assessment are both "on account" payments under the Act. This submission was rejected. The Court held that there is basic difference between duty paid under protest and duty paid under Rule 9B. The duty paid under protest falls under Section11B and duty paid under provisional assessment falls under Rule 9B. Section 11B deals with the claim for refund whereas Rule 9B deals with making of refund in which case the assessee has not to comply with Section 11B. Therefore, Section 11B and Rule 9B operate in different areas. Proceeding further the Court in paragraph No. 14 observed as under: "14. As stated above, para 104 of the judgment in the case Mafatlal Industries Ltd.(supra) states that if refund arises upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view of para 104 of the judgment of this Court in Mafatlal Industries Ltd. (supra), bar of unjust enrichment was not applicable in cases of refund consequent upon adjustment under Rule 9B(5). The judgment of this Court in the case of TVS Suzuki Ltd. (supra), therefore, supports the view which we have taken herein above that refund consequent upon finalisation of provisional assessment did not attract the bar of unjust enrichment." The Supreme Court, therefore, held that in order to get refund the Respondent was bound to comply with Section 11B of the Act. (Para 104 is as set out in SCC which corresponds to para 95 in ELT). What was therefore being considered was Rule 9B(5) of the Central Excise Rules before the proviso was inserted w.e.f. 15.06.1999. 21. It would, thus, be clear that what was under the consideration was the provisions of the Central Excise Act 1944 and Rules framed thereunder as in 1986. This is not an authority for the proposition that in case of provisional assessment under the Customs Act, the doctrine of unjust enrichment will not apply considering Sections 27(2), (3) of the Customs Act. The doctrine of unjust enrichment will only apply when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of refund. That order was reversed by the Supreme Court. In these circumstances, the Supreme Court held that the assessee was bound to make restitution. 25. We are, therefore, clearly of the opinion that insofar as the additional duty is concerned, the provisions of Section 28 of the Customs Act, 1962 would squarely apply and on this count the order of the Tribunal cannot be faulted. We are also unable to accept the proposition that the judgment of the Court in Bussa (supra) stands impliedly overruled. Secondly, under the Customs Act, considering that Section 18(2) speaks of refund after finalisation of assessment, the provisions of Section 27(2) would be clearly attracted. The first and second questions are accordingly answered in favour of Revenue. 26. We then come to the second question insofar as the fine imposed in pursuance to the confiscation. As noted, in appeal the amount of fine has been reduced. The question is whether redemption fine is also subject to the principles of 'unjust enrichment'? In the judgments referred earlier, the principles of 'unjust enrichment' have been applied in a case of duty, cess, tax, fees and the like. No judgment has been brought to ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of recompensation to the State for the assessee having committed a wrong. That section further provides under subsection (2) that the fine in lieu of confiscation is in addition to the duty and charges payable in respect of such goods. Under section 126, if confiscation was ordered the goods would vest in the Government. Therefore, the fine basically is for a wrong done. It is, therefore, not a duty, tax, cess, fees or the like which can be passed on to a consumer. 28. In the instant case on the Appellants partly succeeding in their appeal, on paying the fine as reduced, would have been entitled to release of the goods. The question, therefore, of adjusting the balance amount of the original fine from the amount deposited would not have arisen. The principles of 'unjust enrichment', therefore, would not arise in a case of redemption fine. No authority has been brought to our attention by either side where the principles of 'unjust enrichment' have been applied insofar as the fine or penalty is concerned. In our opinion both on general principles and considering that the Act itself imposes restriction only on refund of duty under Section 28, it would not be possible to attract the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
