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2009 (8) TMI 462

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..... then even in a case of adjustment, the doctrine of ‘unjust enrichment’ cannot be kept out, but has to be verified on facts as to the possibility of the duties being passed on to the consumers or absorbed by the assessee. When the Original authority examines this question, it will have to necessarily bear in mind all these legal aspects including the question of limitation and for this purpose, it is clarified that if it was a case of an application under Section 27, the starting point for running of limitation is date of finalisation of the assessment order and not the order of provisional assessment. With this clarification, the judgment is retained. - 18 of 2005, - Dated:- 27-8-2009 - D.V. Shylendra Kumar and Aravind Kumar, JJ. Shri T.M. Venkatareddy, Advocate, for the Appellant. Shri Rajesh Chander Kumar for M/s. Chander Kumar and Assts., for the Respondent. [Judgment per: Aravind Kumar, J.]. - The Revenue is in appeal, questioning the order of the CESTAT dated 11-2-2005 passed in appeal No. C/4/2003, Final Order No. 213/2005 [2005 (192) E.L.T. 273 (Tri. - Bang.)] whereunder the Tribunal has allowed the appeal filed by the respondent herein and remanded the matter to the origina .....

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..... 402.490 MT of cargo which was lying in the bonded tank. 4. It seems that Notification No. 52/2001-Cus. (N.T.), dated 9-10-2001 came to be issued by which the tariff value of RBD palmolien was reduced from 372 US dollars per MT to 307 US dollars per MT. Thereafter respondent requested for refund of difference of Custom duty and interest amount of Rs. 11,55,156/- on 402.490 MT of RBD Palmolien on the ground that the tariff value prevailing on the date of actual removal of cargo from the bonded tank has to be taken into consideration for the purpose of charging Customs duty. The Adjudicating Authority as per the Order in Original No. 1/2002 dated 14-2-2002 sanctioned the said refund claimed under Section 27(2) of the Customs Act, but ordered the same to be credited to the Consumer Welfare Fund on the ground that importer had failed to establish that the incidence of duty has not been passed on to the buyers. 5. The importer being aggrieved by the same filed an appeal before the Appellate Authority Commissioner of Customs who by order dated 16-2-2002 rejected the appeal and confirmed the order of the Adjudicating Authority which is at Annexure C . The importer being aggrieved by the s .....

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..... f the appeal. 8. We have heard Sri. T.M. Venkata Reddy learned standing counsel for the appellant and Sri Rajesh Chander Kumar appearing for the respondent and we have perused the orders of the adjudicating authority as well as the Appellate Authority and have given our anxious consideration. 9. The main issue revolving around the granting of the refund claimed which is the Customs duty admittedly paid on 27-9-2001 at the time of ex. bonding of bill of entry F. 216/2001 filed for clearance of 500 MT of RBD palmolein oil. It is also found from records that the importer had removed only 97.510 MT of RBD palmolein oil leaving a balance of 402.490 MT in the bonded tank. The test that the importer has to pass for seeking for refund of Customs duty paid is the ingredients mentioned in Section 27(2) of the Customs Act and even otherwise on general principles if the importer had not passed on incidence of duty of the buyer there would not be any burden on the importer to prove the same. These are all admittedly being questions of fact ought to have been examined by the authorities. In this connection, it would be relevant to extract the finding of the Adjudicating Authority which reads as .....

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..... ich ought to have been gone into by the Adjudicating Authority to ascertain the actual cost or otherwise of the goods in order to entertain and grant the relief of refund of Customs duty which exercise is admittedly lacking. The finding of the second Appellate Authority not being based on facts and there being no discussion on these aspects, we find it is a perverse finding not based on facts and to test the claim of refund on the touchstone of general principles as to whether the importer would even otherwise be entitled to claim refund, being a question of fact, the matter stands remitted to the Adjudicating Authority for adjudication afresh. 11. In so far as question No.(v) is concerned, it is the contention of the appellant that the order of the Tribunal is erroneous since refund claim had resulted in reduction of tariff value and it was not due to finalisation of provisional assessment and as such contends that provisions of section 27 are not applicable to the facts and circumstances of the case and non consideration of this aspect by the Tribunal has resulted in great prejudice to the revenue. In this context it is advantageous to notice the provisions of Section 27 of the A .....

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..... the date of adjustment of duty after the final assessment thereof.] In explanation II it has been clearly specified that if the duty is paid provisionally under Section 18, the limitation of one year or six months should be computed from the date of adjustment of duty after the final assessment. In the instant case the adjudicating authority has held that 500 MT of RBD Palmolein had been seized provisionally at the rate of 372 US Dollars PMT as per order dated 14-2- 2002 which is at Annexure- B . Further even the first Appellate Authority in its order dated 16-10-2002 which is at Annexure- C has held in paragraph 2 to the following effect: It is now settled law that in the case of refund arising out of finalisation of provisional assessment, the principle of unjust enrichment is not applicable. 12. The Tribunal in the order dated 11-2-2005 by relying upon the judgment in the case of CCE, Trichirapalli v. Hajee A.M.Abdul Rahiman, has held that the issue is no longer res integra and concluded that the bar of unjust enrichment is not applicable to refund arising on finalisation of provisional assessment. Section 27 gives a right to a person who has paid Customs duty or interest to se .....

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..... t , was a question which was necessarily to be answered with reference to the facts of the case, particularly, as to whether the assessee in fact had passed on the liability to the consumer or had absorbed the tax burden by itself and there being no question of unjust enrichment and as the facts to arrive at the answer to this question having not been satisfactorily examined by the authorities below, we have indicated that the matter deserves to be remanded for ascertaining this aspect. 16. While answering the question and in view of allowing of the appeal, question necessarily requires to be answered in favour of the revenue and against the assessee and in the affirmative. Question No. 5 is as hereunder: (v) Whether the provisions of Section 27 of the Customs Act are applicable to the case of provisional assessment under Section 18 of the Customs Act, 1962? If the answer is to be in the affirmative, then the very provision under which a possible refund claim could be entertained being not attracted and there being no refund at all, the remand would serve no purpose as the remand was for the ascertainment of the factum of unjust enrichment or otherwise on the amount being refunded .....

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..... tance, the question would limit as to whether an application under Section 27 results in a refund; further the question as to whether the refund amount nevertheless not being distributed to the assessee on the applicability of the doctrine of unjust enrichment would get attracted and the question may merit examination only at that stage and not at the stage of a provisional assessment under Section 18 of the Customs Act and therefore, the question itself is a contradiction. Unless it had been ascertained that there was finalisation of the assessment, answering the question in the affirmative may not be very fair or proper to the assessee and may not even elicit correct answer in such situations. 21. In support of the submission, Sri Rajeshchandra Kumar would draw our attention to the judgment of the Supreme Court in the case of Commissioner of Central Excise, Mumbai v. Allied Photographics India Ltd. [2004 (166) E.L.T. 3] and would submit that in a situation of a provisional assessment, further question as to whether the stage was finalisation of a provisional assessment or the initial tentative deposit of the amount towards a provisional assessment, is a question which has to be f .....

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..... ave to be answered in this background. 23. While we appreciate the submissions made by Sri Rajesh chandra Kumar, we also notice that whether a duty payment by an importer initially in the form of a deposit and later as a provisional payment and much later on the finalisation of the assessment as customs duty are all only towards the discharge of the liability for payment of duty under the provisions of the Customs Act, being a levy in the nature of a indirect tax. It has to be presumed that any importer who is a trader or a businessman will necessarily pass on the duty liability to the customers or the consumers. Therefore, a claim for refund to be sustained and to be released can be achieved only in a situation where ultimately the assessee is able to satisfactorily prove before the authorities that such a duty component had not been passed on to the customers of the consumers and it had been actually borne by the assessee itself and then alone, perhaps a refund application would result in flow of some amount to the assessee. But in any other situations, even if it results in a refund of duty, it would flow to the fund and not to the assessee. 24. Even in a situation of adjustment .....

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