Export cess refund and unjust enrichment: revenue must prove duty incidence was passed on, and assessment challenge may be required first.

Refund of export cess was denied where the Revenue could not prove with reliable material that the incidence had been passed on merely because the FOB value was used; contractual terms placing export duties and taxes on the seller also undermined the unjust enrichment objection. The Tribunal further held that cess levied under the repealed export cess enactment was subject to the Customs Act refund framework, so a refund could not be granted unless the underlying assessment was first challenged and modified or set aside. The procedural objection concerning review and appeal proceedings also failed for lack of particulars and proof of any legal bar.

---

---

Issues: (i) whether the refund claims for export cess were barred by unjust enrichment on the footing that the cess had been recovered through the FOB value, (ii) whether refund of cess levied under the repealed export cess enactment was governed by the Customs Act framework and required challenge to the assessment, and (iii) whether the objection regarding the review and appeal proceedings survived.

Issue (i): whether the refund claims for export cess were barred by unjust enrichment on the footing that the cess had been recovered through the FOB value.

Analysis: The FOB definition in Incoterms, by itself, did not establish that the disputed cess had formed part of the realized FOB price. Where the export contracts specifically placed export duties and taxes on the seller's account, the conclusion that the cess burden had been shifted to the foreign buyers could not be sustained merely on assumptions. The burden remained on the Revenue to show by reliable material that the incidence of cess had been passed on.

Conclusion: The finding of unjust enrichment based only on the FOB value could not be sustained.

Issue (ii): whether refund of cess levied under the repealed export cess enactment was governed by the Customs Act framework and required challenge to the assessment.

Analysis: The levy under the export cess enactment expressly incorporated the provisions relating to levy, collection, refunds and exemptions under the Customs Act. Refund of duty collected pursuant to an assessment cannot be granted unless the assessment is first challenged and modified or set aside. The Tribunal applied the settled principle that a refund officer cannot sit in appeal over a subsisting assessment and that the Customs Act refund machinery governs such claims.

Conclusion: Refund could not be maintained without successfully challenging the assessment, and the Customs Act machinery applied.

Issue (iii): whether the objection regarding the review and appeal proceedings survived.

Analysis: The objection was not supported by particulars showing that the proceedings were barred in law on the relevant dates, and the appellant had participated in the appellate proceedings without establishing the alleged defect. The challenge was therefore not made out.

Conclusion: The objection regarding review and appeal proceedings failed.

Final Conclusion: The appeals failed on the combined grounds of unproven shifting of incidence, the applicability of the Customs Act refund scheme, and the absence of a sustainable procedural objection.

Ratio Decidendi: A refund of cess or duty collected pursuant to a subsisting assessment is not maintainable unless the assessee proves that the incidence was not passed on and first succeeds in challenging the underlying assessment where such challenge is required by the governing refund framework.

---