Customs refund after appellate relief remains subject to unjust enrichment when duty incidence is passed on

Refund arising from appellate relief under customs law falls within the statutory refund regime and is subject to the doctrine of unjust enrichment. The Tribunal treated the claim as distinct from a mere adjustment on finalisation of provisional assessment and held that the customs refund provisions apply, with the bar against unjust enrichment. On the facts, the appellants failed to show that the duty and bank guarantee encashment had not been passed on to the buyer, as the buyer had borne the duty and contractual terms placed duty variations on the buyer's account. Refund was therefore denied and credit to the Consumer Welfare Fund was upheld.

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Issues: (i) Whether refund arising after appellate reversal of the provisional assessment was governed by the doctrine of unjust enrichment and the refund provisions under customs law. (ii) Whether the appellants had shown that the incidence of duty and the amount realised through encashment of bank guarantee had not been passed on to the buyer, so as to entitle them to refund rather than credit to the Consumer Welfare Fund.

Issue (i): Whether refund arising after appellate reversal of the provisional assessment was governed by the doctrine of unjust enrichment and the refund provisions under customs law.

Analysis: The adjustment made on finalisation of provisional assessment was distinguished from a refund claim that arose only because of the Tribunal's appellate order. Once the refund was claimed as a consequence of appellate proceedings, it was treated as falling within the statutory refund mechanism under customs law. The decision relied on the principle that such claims are subject to the bar of unjust enrichment, and that the statutory refund framework applicable to customs is pari materia with the corresponding central excise provision.

Conclusion: The refund claim was subject to the doctrine of unjust enrichment and could not be treated as a mere adjustment outside the refund provisions.

Issue (ii): Whether the appellants had shown that the incidence of duty and the amount realised through encashment of bank guarantee had not been passed on to the buyer, so as to entitle them to refund rather than credit to the Consumer Welfare Fund.

Analysis: The record showed that the duty on provisional release was paid by the buyer directly and that the encashed bank guarantee was also ultimately recovered from the buyer through counter-guarantee arrangements. The contractual terms further indicated that variations in customs duty were for the buyer's account. On these facts, the appellants failed to rebut the presumption that the incidence of duty had been passed on, and the refund amount was therefore not payable to them. Credit of the amount to the Consumer Welfare Fund was upheld.

Conclusion: The appellants did not establish that they had borne the duty or bank guarantee amount themselves, and the refund was correctly denied to them.

Final Conclusion: The appeal failed because the refund claim was hit by unjust enrichment and the appellants had not discharged the burden of showing that the duty burden had not been passed on.

Ratio Decidendi: A refund arising from appellate relief under customs law is governed by the statutory refund regime and is barred where the claimant fails to prove that the incidence of duty has not been passed on to another person.

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