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2016 (5) TMI 300 - HC - CustomsRefund - unjust enrichment - Department encashed the bank guarantee of the petitioner and recovered sum of ₹ 9,19,801/ - Since the Supreme Court allowed the appeal of the petitioner, amount already recovered by the department became refundable - Unjust enrichment - Held that:- The bank guarantees were undoubtedly securities to safeguard the interest of the Revenue but, once the High Court dismissed the petitions and vacated the interim relief, the duty became payable as on that date. Encashment of the bank guarantees by the department was thus a step in furtherance of recovery of the duties. In the hands of the department, thus at that stage, it was in the nature of duty and not a security. When subsequently the Supreme Court reversed the judgment of the High Court, this duty became refundable. Any refund application would therefore, necessarily be governed by section 27 of the Act. Cases laws relief upon by the Appellant distinguished on the following grounds:- When the Court observed that the amount of disputed tax or duty that is secured by a bank guarantee, cannot be held to be “paid” to the Revenue, we are in respectful agreement. However, these observations were made in the background of the facts where the High Court had directed the assessee to furnish bank guarantee for the differential duty. The writ petition was ultimately dismissed on the ground of alternative remedy. While doing so, the Court directed the assessee to keep the bank guarantee alive till the matter was decided by the Commissioner, (Appeals). After the Commissioner, (Appeals), dismissed the appeal, the department encashed the bank guarantee. In this background, the CEGAT held that the encashment of the bank guarantee would not amount to payment of duty. This judgment, the High Court upheld holding that no question of law arises. Therefore, the contention of the petitioner cannot be upheld. The petitioner failed to pass the test of unjust enrichment - refund not allowed - Decided against the assessee.
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