2012 (11) TMI 487 - AT - Customs

Supreme Court Reverses Decision on Unjust Enrichment for Captive Consumption

M/s. Central India Polyesters Limited Versus Commissioner of Customs, Kandla

M/s. Central India Polyesters Limited Versus Commissioner of Customs, Kandla - 2013 (287) E.L.T. 132 (Tri. - Ahmd.) Issues:Refund claim based on unjust enrichment principle.Analysis:The case involved a refund claim of excess duty paid on Mono Ethylene Glycol (MEG) used in the production of Partially Oriented Yarn (POY). The appellant's claim for refund was initially rejected as they failed to rebut the presumption of unjust enrichment. However, the Tribunal ruled in favor of the appellant based on the principle that unjust enrichment does not apply when goods are used for captive consumption, citing a previous High Court judgment. The matter was escalated to the Supreme Court, which reversed the High Court's decision, emphasizing that the doctrine of unjust enrichment applies even in cases of goods used for captive consumption. Consequently, the Tribunal remanded the case for further examination by the Assistant Commissioner to determine if the duty burden was passed on to consumers.The adjudicating authority issued a show cause notice for processing the refund claim, requesting invoices to prove that duty incidence was not transferred to others. Despite the appellant's submission of documents, the authority concluded that the duty burden had been passed on and ordered the refund amount to be credited to the consumer welfare fund. The appellant's subsequent appeal was rejected, leading to the current appeal.During the proceedings, the appellant demonstrated that the duty liability was not transferred to customers. They provided evidence, including a Cost Accountant's Certificate, showing a significant loss incurred in the production of POY, indicating that the duty burden was not recovered through sales. The Commissioner rejected this evidence, arguing that the loss had been capitalized, but the Tribunal disagreed, emphasizing that the focus should be on whether the duty was passed on, not future events. Another Cost Accountant's Certificate further supported the appellant's claim of incurring a loss without passing on the duty liability.After thorough analysis and considering all submissions, the Tribunal concluded that the appellant had successfully shown that the duty liability was not transferred to customers, making them eligible for a refund. The case was remanded to the original adjudicating authority to reevaluate the refund claim and process the eligible amount without invoking the unjust enrichment principle.This detailed analysis highlights the complex legal journey of the case, focusing on the application of the unjust enrichment principle, the burden of proof regarding duty incidence, and the relevance of evidence in demonstrating non-transfer of duty liability to consumers.