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2016 (1) TMI 828 - CESTAT MUMBAI

2016 (1) TMI 828 - CESTAT MUMBAI - TMI - Refund - unjust enrichment - finalization of provisional assessment u/s 19 - Scope of Section 27 - adjudicating authority sanctioned the said refund claims but credited the same to Consumer Welfare Fund as the appellant failed to prove that the duty element was borne to themselves and was not transferred or passed on to their customers. - Held that:- Since it has been held per incuriam the bar of Unjust Enrichment would apply to duties paid under protest. .....

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sertion that the said amount is shown as recoverable from the Govt. in their Balance-sheet. Balance sheet have not been produced. - Alongwith the said certificate also two documents are attached which appear to be copy of the Journal and ledger, both certified by the CA. While a certificate claims that these amounts are shown as amount recoverable from the Customs authorities against duty paid under protest, the Journal and ledger only records details of cheques and duty paid under protest. .....

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st the assessee. - Appeal No. C/1028 & 1029/07 - A/85268-85269/16/SMB - Dated:- 7-1-2016 - SHRI RAJU, MEMBER (TECHNICAL) For the Petitioner : Shri Prakash Advocate with Shri Sushanth Murthy, Advocate For the Respondent : Shri D.S. Maan, Assistant Commissioner (AR) ORDER Per: Raju The appellants filed two refund claims. The adjudicating authority sanctioned the said refund claims but credited the same to Consumer Welfare Fund as the appellant failed to prove that the duty element was borne to the .....

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25% in terms of the Hon'ble Bombay High Court order dated 4.9.1993 and 25.10.1993 in connection with Writ Petition No. 1581/93 and 1865/93. Revenue filed SLP with Hon'ble Supreme Court against the said order of Hon'ble High Court. While disposing the SLP, Hon'ble Supreme Court vide order dated 11.2.1994 ordered to make deposit of 50% of duty involved in respect of consignment imported against 7 specific license and for furnishing Bank Guarantee to the extent of 25% of the duty i .....

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order that benefit of exemption under Notification No. 159/90-Cus dated 30.3.1990 be denied to the goods imported against export of flavored Shivalik Menta Base, as indicated in the annexure to the show-cause notice. An amount of duty of ₹ 97,61,183/- be recovered forthwith from M/s Jindal Dye Intermediate Ltd. in respect of the said goods and the assessments finalized. Aggrieved by the said order of Commissioner, both the Department and the appellant preferred appeal with the CEGAT. CEGA .....

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order of the Hon'ble Supreme Court. 2. The learned Counsel for the appellant argued that the assessment was provisional and the provisions of Section 27 of the Customs Act relating to refund were not applicable to the finalization of provisional assessment under Section 18 of the Customs Act. In support of the said claim, the appellant relied on decision of Hon'ble Supreme Court in case of Commissioner Vs. Allied Photographics India Ltd. - 2004 (166) ELT 3 (SC). In the said decision, Hon .....

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es that when the duty leviable on the goods is assessed finally in accordance with the provisions of these Rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be. Any recoveries or refunds consequent upon the adjustment under sub-rule (5) of Rule 9B will not be governed by Sec .....

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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. 14. As stated above, Para 104 of the judgment in the case Mafatlal Industries Ltd. (supra) states that if refund arises upon finalisation of provisional assessment, Section 11B will not apply. Para 104 of the said judgment does not de .....

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nt. Therefore, it was a case of payment of duty under protest. However, in the said decision, this Court applied Para 104 of the judgment of the Constitution Bench in the case of Mafatlal Industries Ltd. (supra), which with respect, had no application. As stated above, Para 104 of the judgment in the case of Mafatlal Industries Ltd. (supra) dealt with refund consequent upon finalisation of provisional assessment. Para 104 does not deal with refund of duty paid under protest. As stated above, the .....

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is, therefore, per incuriam. Learned Counsel for the respondent herein placed reliance on the judgment of this Court in the case of TVS Suzuki Ltd. (supra). In that case, application for refund was filed. This was on completion of final assessment. On 9-7-1996, the Department issued a show cause notice as to why the refund claim should not be rejected for non-compliance of Section 11B. By order dated 17-7-1996, the refund claim was rejected on the ground that it was beyond limitation. On appeal .....

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nt 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 appellant also relied on the decision of the Tribunal in the case of Oriental Export Vs. Commissioner of Customs, New Delhi - 2001 (127) ELT 576 (Tri-Del). In the said decision, the Tribunal has observed as follows: - 4. We have carefully considered the submission .....

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nt, should have ordered refund of the excess amount paid by the assessee. Since such a procedure was not resorted to by the adjudicating authority while finalizing the assessment, applications were made. 6. In the facts and circumstances following the ratio of the aforesaid decision and in view of the observations made by the Supreme Court in the case of Mafatlal Industries we are of the view that unjust enrichment is not applicable to the provisional assessment in terms of Section 18 of the Cus .....

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icable to provisional assessment in terms of Section 18 of the Customs Act which is similar to Rule 9B of the Central Excise Rules. A two-Judge Bench of this Court in Commissioner of Central Excise, Mumbai v. Allied Photographics India Ltd. [2004 (163) E.L.T. 401 (S.C.) = 2004 (4) SCC 55], noticing the inconsistency, doubted the correctness of two decisions rendered by three-Judge Bench of this Court in, i.e., (i) Sinkhai Synthetics & Chemicals (P) Ltd. v. Commissioner of Central Excise [200 .....

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.C.) = 2004 (4) SCC 34] held that the judgment in Sinkhai Syntheticss case (supra) was per incuriam [para 14 at page 52] and approved the decision in the later case, i.e., TVS Suzukis case (supra). The three-Judge Bench has also taken the same view, as was taken by the Tribunal, to the effect that the doctrine of unjust enrichment is not applicable to the provisional assessment even after the finalisation thereof. The point in issue in the present case is, thus, squarely covered by the three-J .....

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t once the C.A. certificate is produced then the onus to prove that thee is unjust enrichment shifts to the Department. For this purpose, the law relied on the decision of the Tribunal in the case as under: - 3. Learned AR relies on the impugned order. He further relied on the decision of Hon'ble Bombay High Court in the case of Bussa Overseas and Properties Pvt. Ltd. Vs. Union of India 2003 (158) ELT 135 (Bom). In the said case, the Hon'ble High Court has observed as under: - 33. This l .....

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ent under Rule 9B is subjected to the procedure established under Section 11B(2) of the Centra1 Excise Act. The amended provisions of Rule 9B has been recently considered by the Apex Court in the case of Commissioner of Central Excise v. T.V.S. Suzuki Ltd. reported in 2003 (156) E.L.T. 161 (S.C.) and it is held by the Apex Court that the refund claims arising under Rule 9B prior to 25-6-1999 will not be governed by the restrictions in Section 11A and Section 11B of the Central Excise Act. In oth .....

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of the judgment of the Apex Court in the case of Mafatlal Industries (supra), the refund arising under Section 18 of the Customs Act cannot be subjected to the provisions of Section 27 of the Customs Act, cannot be accepted. Since refunds arising under Section 18 of the Customs Act has been expressly subjected to the procedure prescribed in Section 27 of the Customs Act, it is not open to the Petitioners to contend that the Parliament in its wisdom thought it fit not to subject the refunds aris .....

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s the goods which are finally assessed. Sub-rule (5) provides that when the duty leviable on the goods is asssessed finally in accordance with the provisions of these Rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be. Any recoveries or refunds consequent upon the adjustm .....

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that if an independent refund claim is filed after the final decision under Rule 9B(5) re-agitating 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. It is clear from the decision of Hon Supreme Court that if the final orders passed under sub-rule (5) are appealed against - or questioned in a writ petition or suit, as t .....

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Notification No. 159/90-Cus dated 30.3.1990 be denied to the goods imported against export of flavored Shivalik Menta Base, as indicated in the annexure to the show-cause notice. An amount of duty of ₹ 97,61,183/- be recovered forthwith from M/s Jindal Dye Intermediate Ltd. in respect of the said goods and the assessments finalized. This order was appealed against by the appellants. Consequent to the appeal to higher forums the refund arose. In view of the observation of Hon SC such cases .....

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er Vs. Allied Photographics India Ltd. - 2004 (166) ELT 3 (SC). In the said decision, Hon'ble Supreme Court has 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 finalisation of provisional assessment, Section 11B will not apply. Para 104 of the said judgment does not deal with payment under protest. In the light of what is stated herein, we may now consider the judgment of this Court in the case S .....

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udgment of the Constitution Bench in the case of Mafatlal Industries Ltd. (supra), which with respect, had no application. As stated above, Para 104 of the judgment in the case of Mafatlal Industries Ltd. (supra) dealt with refund consequent upon finalisation of provisional assessment. Para 104 does not deal with refund of duty paid under protest. As stated above, there is a difference under the Act between payment of duty under protest on one hand and refund consequent upon finalisation of prov .....

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of TVS Suzuki Ltd. (supra). In that case, application for refund was filed. This was on completion of final assessment. On 9-7-1996, the Department issued a show cause notice as to why the refund claim should not be rejected for non-compliance of Section 11B. By order dated 17-7-1996, the refund claim was rejected on the ground that it was beyond limitation. On appeal, the Commissioner (Appeals) observed that the bar of unjust enrichment was not applicable as the assessee claimed refund conseque .....

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consequent upon finalisation of provisional assessment did not attract the bar of unjust enrichment. In the case of Commissioner Vs. Allied Photographics India Ltd.(Supra), the Hon'ble Supreme Court has differentiated between the duty paid provisionally and duty paid under protest . In this decision the Hon Supreme Court has held it s decision in the case of Sinkhai Synthetics & Chemicals Pvt. Ltd. (2002 (143) E.L.T. 17 (S.C.)) per incuriam. In the case of Sinkhai Synthetics & Chemi .....

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e impugned order observes that mere production of copy of ledger account showing refund amount as customs duty paid under protest is not sufficient to establish that they have not passed on the burden of duty to their customers. 4.4 On examination of the C.A. certificate submitted by the appellant, along with ledger and journal, both certified by the CA, it is seen that the claim of the appellant is based on assertion that the said amount is shown as recoverable from the Govt. in their Balance-s .....

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s amount recoverable from the Customs authorities against duty paid under protest from year 1994 till date. Along with this certificate are enclosed two documents which appear to be journal and Ledger titled Particulars of taxes and duties paid under protest, both certified by the CA. The journal has entries from January 1994 to March 2006 while the ledger is of the period 1.4.2005 to 31.3.2006. Journal has an entry dated 7/3/1994 of an amount ₹ 1,944,170/-. Another certificate of C.A. M/ .....

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