Refund on provisional assessment can proceed as a challenge, with exemption conditions and unjust enrichment test satisfied.

A refund claim filed before finalisation of provisional assessment can itself operate as a challenge to the assessment, so rejection on the basis that the assessment was not separately contested is not warranted. The Tribunal also treated the exemption conditions for special additional duty as satisfied where the importer had completed the prescribed registration, application, bond, and end-use account requirements, and it accepted that the refund was not barred by unjust enrichment because the duty was shown as receivable and not passed on. On those grounds, the refund was held admissible.

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Issues: (i) whether a refund claim filed before finalisation of provisional assessment could be rejected on the ground that the assessment was not challenged; (ii) whether the conditions of the exemption notification for special additional duty were fulfilled; (iii) whether the refund claim was barred by unjust enrichment.

Issue (i): whether a refund claim filed before finalisation of provisional assessment could be rejected on the ground that the assessment was not challenged.

Analysis: The Bill of Entry was assessed provisionally under Section 18 of the Customs Act. The refund application had been filed even before finalisation of the provisional assessment. In such a situation, the filing of the refund claim itself constituted a challenge to the assessment, and rejection on the basis of Priya Blue was not warranted.

Conclusion: The objection based on challenge to the assessment was not sustainable and was decided in favour of the assessee.

Issue (ii): whether the conditions of the exemption notification for special additional duty were fulfilled.

Analysis: The assessee had registered under Rule 3 of the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, had filed the requisite application under Rule 4, executed the bond, and maintained end-use accounts. The Tribunal treated the conditions for exemption from special additional duty as identical to those already satisfied for exemption from additional duty, and found no basis to deny the benefit.

Conclusion: The assessee was held to have satisfied the notification conditions and was entitled to the refund.

Issue (iii): whether the refund claim was barred by unjust enrichment.

Analysis: An independent chartered accountant's certificate, based on examination of the accounts, showed that the duty had been reflected as receivables and not passed on as cost or revenue expenditure. In the absence of contrary strong evidence from the Revenue, the certificate was accepted.

Conclusion: The refund claim was not hit by unjust enrichment and this issue was decided in favour of the assessee.

Final Conclusion: The refund claim was allowed because the assessment objection failed, the exemption conditions were satisfied, and unjust enrichment was not established.

Ratio Decidendi: A refund claim filed before finalisation of provisional assessment can operate as a challenge to the assessment, and refund cannot be denied when the notification conditions are met and the incidence of duty is shown not to have been passed on.

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