Tribunal reinstates refund for differential customs duty, emphasizing need for conclusive evidence

M/s CENTURY ENKA LTD Versus COMMISSIONER OF CUSTOMS (IMPORT), MUMBAI

M/s CENTURY ENKA LTD Versus COMMISSIONER OF CUSTOMS (IMPORT), MUMBAI - TMI Issues:
Refund claim based on unjust enrichment principle.

Analysis:
The appeal was filed by M/s Century Enka Ltd. against an Order-in-Appeal passed by the Commissioner of Customs (Appeals), Mumbai. The dispute arose from the import of Spin Finish Oil under Notification No. 51/86. The Tribunal had previously settled the issue in favor of the appellant, leading to a refund claim of Rs. 24,00,891 for the differential customs duty. Initially, the refund was ordered to be credited to the consumer welfare fund due to unjust enrichment concerns. However, after a series of legal challenges and detailed examinations, the Dy. Commissioner of Customs sanctioned the refund based on findings that the duty burden was not passed on to the buyers. The Dy. Commissioner considered various documents, including a Chartered Accountant's certificate, comparative sale price statements, and other relevant records to support the refund decision.

The Revenue appealed the refund order, arguing that the Chartered Accountant's certificate alone was not conclusive proof of non-passing of duty burden. The Revenue contended that uniformity in prices before and after import did not definitively prove absence of passing on the duty burden. The Commissioner (Appeals) set aside the refund order, citing precedents and principles related to unjust enrichment, emphasizing the need for conclusive evidence beyond the Chartered Accountant's certificate.

The appellant argued that the Chartered Accountant's certificate was submitted as per Revenue's direction and was supported by relevant records. They highlighted Circular No. 18/2010-Cus, which allowed reliance on such certificates for proving non-passing of duty burden. The appellant sought the restoration of the refund order based on the detailed findings of the Dy. Commissioner and the supporting documents.

After considering the arguments, the Tribunal found that the Dy. Commissioner had thoroughly examined the relevant documents and issued a speaking order justifying the refund based on the absence of unjust enrichment. The Tribunal noted that the appellate order lacked substantive reasoning and merely relied on the grounds of appeal without challenging the Commissioner's findings. Consequently, the Tribunal set aside the appellate order and reinstated the Dy. Commissioner's decision to grant the refund, ruling in favor of the appellant and providing for any consequential relief.

In conclusion, the judgment addressed the issue of unjust enrichment in the context of a refund claim, emphasizing the importance of detailed examination of evidence and supporting documents to determine whether the duty burden was passed on to the buyers. The decision highlighted the significance of a reasoned order based on thorough analysis in such cases.