2012 (1) TMI 31 - HC - Customs

Court allows late appeal, affirms Customs Act refund procedure, rejects unjust enrichment retroactivity. Appeal disposed without costs.

The court condoned a three-day delay in filing the appeal and affirmed the tribunal's decision that refund under Section 18 of the Customs Act should be ... Whether claim of refund arising out of final assessment to be made vide an application u/s 27 or the same has to be refunded immediately u/s 18 not requiring assessee to move an application – bill of entries of import were provisionally assessed on 24.08.98 & 02.02.99 and duty was paid – refund arised on final assessment on 21.06.99, 15.06.99 – whether clause of unjust enrichment u/s 27(2) would be applicable - Held that:- The assessee has paid provisional duty which gets reduced on final assessment. The assessee, therefore, becomes entitled to refund which is payable in terms of Rule 9B of the Excise Act, 1944 or Section 18 of the Act. For refund on this account, no application is required to be filed u/s 27 of the Act and therefore, sub-Section (2) relating to unjust enrichment is not applicable. Further, insertions vide sub-sections (3), (4) and (5) to Section 18 are effective from 13.07.06 and obviously are not applicable to the case in hand as they do not have retrospective effect. - Decided in favor of assessee. Issues Involved:1. Delay in filing the appeal.2. Applicability of Section 18 vs. Section 27 of the Customs Act for refund.3. Requirement of filing an application for refund.4. Principle of unjust enrichment.Issue-wise Detailed Analysis:1. Delay in filing the appeal:The court condoned the delay of three days in filing the present appeal and disposed of the application.2. Applicability of Section 18 vs. Section 27 of the Customs Act for refund:The primary legal question framed was whether the Customs, Excise, and Service Tax Appellate Tribunal was correct in holding that refund under Section 18 of the Customs Act should be made without any application for refund and that Section 18 was applicable instead of Section 27. The respondent imported petroleum crude oil, which was provisionally assessed. Upon final assessment, the respondent was entitled to a refund. The Assistant Commissioner rejected the refund application as it was filed beyond the stipulated period under Section 27(1)(b). The tribunal allowed the appeal, holding that Section 18 was applicable and not Section 27, and thus no application for refund was required.3. Requirement of filing an application for refund:The tribunal's decision was based on the fact that the final assessment orders were not communicated to the respondent-assessee. It was held that under Section 18, the respondent was not required to file any application for refund, and the refund should have been paid suo moto by the appellant. The principle of unjust enrichment was deemed inapplicable as the provisions were incorporated in Section 18 effective from 13.7.2006 and did not have retrospective effect. The court discussed the amendments to Section 18, which included sub-sections (3), (4), and (5), emphasizing that these provisions did not have retrospective operation.4. Principle of unjust enrichment:The court examined the principle of unjust enrichment, which was incorporated in Section 27(2) and whether it applied to the present case. The court referred to several judgments, including the Supreme Court's decision in Mafatlal Industries Ltd. vs. UOI, which explained that all refund claims, except in the case of unconstitutional levy, must be filed and adjudicated under Section 27. The court also discussed the Gujarat High Court's decision in Hindalco Industries Ltd., which held that the amendments to Section 18 were substantive and not clarificatory, thus not applicable retrospectively. The court concluded that in cases of provisional assessment, the refund should be made without requiring an application under Section 27, and the principle of unjust enrichment would not apply. The court also noted the distinction between provisional assessment refunds and refunds due to appellate or court orders, where Section 27 would apply.Conclusion:The court affirmed the tribunal's decision, holding that Section 18 was applicable, and the refund should have been made without an application. The principle of unjust enrichment did not apply as the relevant provisions were not retrospective. The appeal was disposed of with no costs.