2007 (10) TMI 79 - AT - Customs

Key Points in Appeal Disposal: Refund granted, no unjust enrichment bar, duty-free benefit denied post ship breaking.

The appeal was disposed of with the following key points: The refund of Rs.5,90,205/- shall be granted suo moto, and the bar of unjust enrichment shall ... Provisional assessment proceeding was initiated in 1999 – Differential duty was deposited in 2004 – Hence presumption of unjust enrichment does not arise – Refund is allowed even without filing of a separate refund claim Issues Involved:1. Finalization of provisional assessment.2. Applicability of exemption notifications.3. Refund of excess duty paid and the bar of unjust enrichment.4. Use of duty-free stores on ships permitted for ship breaking.5. Conversion of LDT to MT for duty assessment.Detailed Analysis:1. Finalization of Provisional Assessment:The appellant imported five old ships for ship breaking between 1992 and 1996, which were provisionally assessed under Section 18 of the Customs Act due to pending clarifications on various items on board. The Central Board of Excise & Customs issued a circular in 1996 clarifying the classification of items on board ships for breaking. Consequently, the Assistant Commissioner issued final assessment orders demanding a differential duty of Rs.12,05,840/-. After several rounds of appeals and remands, the Assistant Commissioner finally assessed the duty payable as Rs.6,15,635/-, determining an excess payment of Rs.5,90,205/- eligible for refund.2. Applicability of Exemption Notifications:The appellant argued that the original authority should have considered the exemption notifications during the finalization of the provisional assessment. The Commissioner (Appeals) found that the appellant's claim for exemption under Notification 167/86-CE was not applicable as the subject goods (vessels) could not have been manufactured without the aid of power. Other claims for exemptions under various notifications were either not substantiated or related to notifications that were rescinded by the time the bills of entry were filed.3. Refund of Excess Duty Paid and the Bar of Unjust Enrichment:The appellant sought the return of Rs.12,05,840/- with interest, arguing that the concept of unjust enrichment should not apply as the assessment was provisional. The Tribunal held that the bar of unjust enrichment would not apply to the amount of Rs.5,90,205/- found eligible for refund. The Tribunal noted that the customs duty is an indirect tax, and the burden of duty is presumed to be passed on to the customers. However, given the peculiar facts of the case, the refund was to be granted suo moto without the need for a separate claim.4. Use of Duty-Free Stores on Ships Permitted for Ship Breaking:The appellant claimed the benefit of Regulation 2 of Imported Stores (Retention on Board) Regulations, 1962, which permits consumption of stores without payment of import duty while the vessel is not a foreign-going vessel. The Tribunal rejected this claim, stating that vessels permitted for ship breaking are no longer considered foreign-going vessels and thus not eligible for duty-free stores.5. Conversion of LDT to MT for Duty Assessment:The appellant argued that the weight of fuel, oil, and foodstuffs should be deducted from the LDT of ships for assessment purposes. The Tribunal found no evidence to support the claim that the LDT of the ship included these items or that the Department compelled the conversion of LDT to MT.Conclusion:The appeal was disposed of with the following key points:- The refund of Rs.5,90,205/- shall be granted suo moto, and the bar of unjust enrichment shall not apply.- The appellant is not eligible for the benefit of duty-free stores after the vessel has been permitted for ship breaking.- The appeal is otherwise rejected, and the finalization of provisional assessment and other claims were upheld as per the remand orders and the findings of the Commissioner (Appeals).Pronouncement:The judgment was pronounced in Court on 10-10-07.