TMI Blog2003 (9) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... rted 7 consignments of compound alcoholic preparations on (concentrated extracts) for the manufacturing of Whisky and had filed bills of entry for home clearance. Since the goods were not allowed clearance, the Petitioners filed Writ Petition No. 2031 of 1986 in this Court. Pursuant to the interim order passed in the said Writ Petition No. 2031 of 1986, the 7 consignments were assessed provisionally under Section 18 of the Customs Act. Consequent to the provisional assessment, the Petitioners paid provisional duty of Rs. 99,32,438/- and cleared the goods. 3.On 9th October, 1990 [1991 (53) E.L.T. 165 (Bom.)], this Court disposed of a batch of Writ Petitions, including the above Writ Petition filed by the Petitioners. In accordance with that judgment, the Respondent No. 2 finally assessed the 7 Bills of Entry on 21-10-1990. On adjustment of the duty finally determined from the duty provisionally paid, excess duty of Rs. 39,71,412/- became refundable to the Petitioners under Section 18(2) of the Customs Act. 4.As the excess amount of duty arising on finalisation of the provisional assessment was not refunded, the Petitioners by their letters dated 26-12-1990 and 16-9-1991 called u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Senior Advocate appearing on behalf of the Petitioners submitted that the impugned order incorrectly proceeds on the basis that the amount deposited by the Petitioners was not on account of provisional assessment made under Section 18 of the Customs Act. He submitted that from the endorsements made on the Bills of Entry and from the Bond executed by the Petitioners which is accepted by the Respondents, it is clear that the amount deposited at the time of clearance of the goods was pursuant to the provisional assessment made under Section 18(1) of the Customs Act, according to Mr. Bharucha, on final assessment, if the duty determined is less than the amount deposited under the provisional assessment, then, it is the obligation of the department to adjust the duty finally assessed against the amount paid and refund the excess amount under Section 18(2) of the Act and to such a refund, the provisions of Section 27 is not applicable. In other words, the submission was that the refund of the amount arising on finalisation of the provisional assessment is not governed by Section 27 of the Customs Act. 7.Mr. Bharucha submitted that Section 27 of the Customs Act applies to the refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed is in excess of the duty finally assessed, then, the excess amount refundable to the assessee consequent upon the adjustment under Rule 9B(5) will not be governed by Section 11B of the Central Excise Act, applying the same analogy, Mr. Bharucha submitted that the refund arising consequent upon the final assessment under Section l8(2), is not governed by the provision of Section 27 of the Customs Act. 10In the case. of Sinkhai Synthetics Chemicals Pvt. Ltd. vs. CCE, Aurangabad reported in 2002 (143) E.L.T. 17 (S.C.), the Apex Court, following the decision in Mafatlal Industries Ltd. (supra) held that where the excise duty is paid under protest, any recoveries or refunds arising on adjustment of duty finally assessed under Rule 9B(5) will not be governed by Section 11A or Section 11B of the Excise Act. Mr. Bharucha submitted that since Rule 9B of the Central Excise Rules is para materia with Section 18 of the Customs Act and Section 11B of the Central Excise Act, is para materia with Section 27 of the Customs Act, the ratio laid down by the Apex Court in the case of Sinkhai Synthetics (supra) is squarely applicable to the facts of the present case. 11.Mr. Bharucha relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that Section 27 refers to refund of duty paid pursuant to an order of assessment. The term 'assessment' is defined under Section 2(2) of the Customs Act to include provisional assessment. Therefore, the application required to be made under Section 27 for refund of duty includes refund of duty paid under the provisional assessment. Accordingly, it was submitted that the Customs Authorities were justified in insisting upon the Petitioners to apply for refund under Section 27 of the Customs Act. 15Mr. Desai. further submitted by his oral and written submissions that the ratio laid down by the Apex Court in the case of Mafatlal Industries Ltd. (supra) that any recovery or refund consequent upon the adjustment under Rule 9B(5) of the Excise Rules will not be governed by the provisions of Section 11A or 11B of the Central Excise Act, is not applicable to the present case, because, the findings of the Apex Court are based on the provisions of the Central Excise Act and not the Customs Act. He submitted that under the Customs Act, liability to pay the customs duty arises as soon as the goods enter the territorial limits of India and if any person does not want to clear the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty element is passed on to the Customer and, therefore, the Petitioners are not entitled to any relief in the present petition. 18.In rejoinder, Mr. Sankhlecha submitted that once it is held that Section 27 of the Customs Act is not applicable to a refund arising or finalisation of the provisional assessment under Section 18(2) of the Customs Act, then, as held by the Apex Court in the case of Mafatlal Industries Ltd. (supra), there is no requirement in law on the part of the Petitioners to establish that there has been no unjust enrichment. Referring to the Customs (Provisional Duty Assessment) Regulations, 1963, Counsel for the Petitions submitted that the amount deposited with the Government at the time of provisional assessment is an estimate of duty most likely to be levied and such deposit is in the nature of security deposit. It was submitted that to get refund of security deposit, the Petitioners are not required to establish that there is no unjust enrichment. It was submitted that this issue is settled by the decision of the Tribunal in the case of Alcatel Modi Net Works Systems v. Commissioner of Customs reported in 2000 (117) E.L.T. 522 (Tribunal) and the said d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Customs Act, 1962, especially when the Parliament has not made the said concept applicable to such refund. 21.It was urged that in view of specific statutory provision contained Section 18 of the Customs Act, even while granting relief in a Writ Petition, the concept of unjust enrichment cannot be made applicable to the refund arising consequent to finalisation of provisional assessment. Relying upon the decision of this Court in the case of Killick Caribonium v. Union of India reported in 2002 (143) E.L.T. 491 (Bom.), it was submitted that the concept of unjust enrichment has been applied by Courts only in respect of refund of duties and not in respect of amounts deposited with the Government as a security deposit. It was submitted that the amount found in excess on finalisation of the provisional assessment is not duty and for refund of such excess amount the concept of unjust enrichment is not applicable. 22.It was submitted that even though the Petitioners have already recovered the amount of refund from their customers, in view of the concept of unjust enrichment being not applicable to the present case and there being no legislative mandate to the Government to cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n though the Petitioners have recovered the amount from the customers, their being no right with the Government to retain the refund arising under Section 18(2), the same must be directed to be refunded to the Petitioners with interest. 25.Let us take the last contention first. According to the Petitioners, even though they have recovered the amount from the customers, there is no right with the Government to retain the amount of refund and, therefore, the Government must be directed to refund the amount with interest. This contention of the Petitioners is wholly misconceived and is untenable in the light of the decision of the Apex Court. While upholding the constitutional validity of Section 27 of the Customs Act both before and after the 1991 amendment, the Apex Court in the case of Mafatlal Industries Ltd. (supra) inter alia held at Para 108 as follows : "The doctrine of unjust enrichment is a just and salutory doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms Act, the principles of unjust enrichment contained in Section 27 of the Customs Act are not applicable. In the present case, since the incidence of duty element has been admittedly passed on to the consumer, no direction can be given to the Customs Authorities to refund the amount as it results in unjust enrichment to the Petitioners. 27.The contention of the Petitioners that once the refund is due under Section 18(2), then the Customs authorities are under an obligation to refund the amount is also without any merit because, from a bare perusal of Section 18 of the Customs Act it is seen that no such obligation is cast upon the Customs authorities. Section 18 merely entitles the assessee to get refund if the duty finally determined in less than the duty paid provisionally. Moreover, Section 18 cannot be read in isolation. It has to be read with Section 27 of the Customs Act. Explanation II to Section 27 of the Customs Act (Explanation 1 prior to 1-8-1998) provides that to obtain refund of any duty paid provisionally under Section 18, an application for refund must be made within the period of limitation prescribed therein. The limitation prescribed under Section 27 of the Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been limited to Rs. 600/- then to recover the differential amount of Rs. 200/- (Rs. 800 - Rs. 600) the Explanation II to Section 27 would apply. This ingenious argument is wholly unsustainable. Once the duty is paid provisionally under Section 18(1) of the Act, any refund of that amount would arise only on final assessment and not otherwise. An importer cannot apply for refund of duty paid provisionally unless there is final assessment order and refund arises on such final assessment order. If the duty determined on final assessment is modified by the Customs authorities at the instance of the importer, then the duty determined as per the modified order will represent the final assessment order. It cannot be said that if the final assessment order is modified at the instance of the importer the modified order does not represent the final assessment order. In other words, if a final assessment order is modified at the instance of the importer, then, the refund arising on final assessment order as well as the additional refund arising on modification of the final assessment order would be governed by Explanation II to Section 27 of the Customs Act. Therefore, there is no distinction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f duly, whether assessed provisionally or finally. In either case, the amount paid is duty. If, on final assessment, the duty paid provisionally is found to be more then, the differential amount become refundable, subject to the limitation prescribed under Section 27 of the Customs Act. The contention of the Petitioners that the amount paid on provisional assessment is not duty cannot be accepted, because without payment of duty, the goods are not allowed clearance under Section 47 of the Customs Act. Therefore, what is paid on provisional assessment is the provisional duty and what becomes refundable on final assessment is the differential duty between the duty provisionally paid and the duty finally assessed. Section 27 of the Customs Act, applies to refund of duty paid pursuant to an order of assessment. Section 2(2) of the Customs Act defines the word "assessment" to include provisional assessment. Therefore, refund of duty paid on provisional assessment is squarely covered by Section 27 of the Customs Act. 30.The next contention of the Petitioners is that even if 27 of the Customs Act applies to the present case, the principles of unjust enrichment incorporated in Section 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Initially Explanation I to Section 27 provided for the limitation to claim refund of duty provisionally assessed under Section 18 of the Customs Act. By Act 21 of 1998 (with effect from 1-8-1998), the Explanation I to Section 27 has been renumbered as Explanation II. Thus, under the Customs Act, the refund of duty arising on finalisation of the provisional assessment has always been subject to the procedure prescribed under Section 27 of the Customs Act. 32.As stated hereinabove, provisions of Excise law were different at the material time. Explanation to Section 11B(1) of the Central Excises Salt Act, 1944, as enacted originally provided that the refund arising on finalisation of provisional assessment will be subject to the limitation prescribed under Section 11B of the Excise Act. That explanation to Section 11(B)(1) was omitted by Act 44 of 1980. As a result, the procedure prescribed under Section 11B was not applicable to the refunds arising on finalisation of the provisional assessments. In view of this lacuna, the Apex Court in the case of Mafatlal Industries (supra) held that the recoveries or refund arising on finalisation of provisional assessment under Rule 9B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Apex Court in the case of Mafatlal Industries. As stated here in above the decision of the Apex Court in the case of Mafatlal Industries (supra) is distinguishable on facts. Similarly, the decision of the Apex Court in the case of Serai Kella Glass Works (supra) is also distinguishable on facts. 35.The decision of the CEGAT in the case of Alcatel Modi Networks systems v. Commissioner of Customs, New Delhi reported in 2000 (117) E.L.T. 522 (T) cannot be said to be good law because, the decision of the Tribunal is based on the decision of this Court in the case of Solar Pesticides v. Collector reported in 1992 (57) E.L.T. 201 (Bom.) and the decision of this Court in the case of Solar Pesticides (supra) has been overruled by Judges Bench of the Apex Court reported in 2000 (116) E.L.T. 401 (S.C.) = (2000) 2 SCC 705 [Union of India v. Solar Pesticides pvt. Ltd.] Therefore, the decision of the Tribunal in the case of Alcatel Modi (supra) must be held to be contrary law. 36.It is true that the Tribunal in the case of Alcatel Modi (supra) following the decision of the Apex Court in the case of Mafatlal Industries has held that the refund of duty or recovery of duty as a res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Alcatel Modi, the 3 Judges Bench of the Apex Court did not doubt the correctness of the 3 Judges Bench decision of the Apex Court in the case of Solar Pesticides Limited (supra). Therefore, as held by the Apex Court in the case of Vijaylaxmi Cashew Co. v. CTO reported in (1996) 1 S.C.C. 468 decision of a Bench not doubted by any later Bench cannot be treated as overrules by implication. Accordingly it must be held that the ratio laid down by the Apex Court in the case of solar Pesticides Limited still holds the field. The Apex Court in the case of S. Shanmugavel Nadar v. State of Tamil Nadu reported in 2002 (8) SCC 361 has held that the reasons given in the judgment of the lower forum can be said to have merged only if the superior Court, either adopts or reiterates the reasoning or expressly records its approval of the reasoning. While dismissing the appeal of the revenue in the case of Alcatel Modi, the Apex Court has neither adopted nor expressly recorded its approval of the reasoning given by the Tribunal. In this view of the matter, we hold that on dismissal of the Appeal filed by the revenue against the decision of the Tribunal in the case of Alcatel Modi, only the operat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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