Supreme Court directs refund of pre-deposit amount with interest, upholds Article 226 jurisdiction.

The Supreme Court allowed the writ petition, directing the respondents to refund the amount of Rs. 88,44,510/- along with interest. The court held that the amount paid by the petitioner was a pre-deposit, not a duty, and thus the doctrine of unjust enrichment did not apply. The court affirmed its jurisdiction under Article 226 of the Constitution and emphasized that the High Court's power cannot be curtailed by statutory provisions. The writ petition was allowed with consequential relief, and no costs were awarded.

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Issues Involved:

1. Refund of amount paid under protest.
2. Application of the doctrine of unjust enrichment.
3. Jurisdiction of the High Court under Article 226.
4. Treatment of pre-deposit under Section 129E of the Customs Act, 1962.

Issue-Wise Analysis:

1. Refund of Amount Paid Under Protest:

The petitioner sought a refund of Rs. 88,44,510/- paid "under protest" during the pendency of its appeal before the Supreme Court. The Supreme Court allowed the appeal, and the petitioner filed for a refund. The Deputy Commissioner of Customs rejected the refund, stating it would be credited to the Consumer Welfare Fund due to unjust enrichment. The petitioner argued that the amount was a pre-deposit, not a duty, and thus the doctrine of unjust enrichment did not apply.

2. Application of the Doctrine of Unjust Enrichment:

The petitioner contended that the amount paid was not a duty but a pre-deposit, and therefore, the doctrine of unjust enrichment under Section 27 of the Customs Act, 1962, did not apply. The court examined several precedents, including the Supreme Court's decision in Mafatlal Industries Ltd. vs. Union of India, which held that amounts paid under protest pending appeal are subject to refund procedures under Section 11B of the Central Excise Act, 1944, and Section 27 of the Customs Act, 1962. However, the court distinguished the petitioner's case, noting that the amount was paid long after the clearance of goods and was not a duty but a pre-deposit.

3. Jurisdiction of the High Court Under Article 226:

The court affirmed its jurisdiction under Article 226 of the Constitution to entertain the writ petition, despite the existence of alternate remedies. It emphasized that the High Court's power under Article 226 is plenary and cannot be curtailed by statutory provisions. The court decided to examine the case on merits due to the long pendency of the writ petition.

4. Treatment of Pre-Deposit Under Section 129E of the Customs Act, 1962:

The court analyzed whether the amount paid by the petitioner could be considered a pre-deposit under Section 129E of the Customs Act, 1962. It noted that pre-deposits made as a condition for hearing appeals are not considered duties and are refundable upon the appeal's success. The court concluded that the amount paid by the petitioner was akin to a pre-deposit under Section 131 of the Customs Act, 1962, and thus, the doctrine of unjust enrichment did not apply.

Conclusion:

The court allowed the writ petition, directing the respondents to refund the amount of Rs. 88,44,510/- along with interest at the rates prevailing for refund under notifications issued from time to time under Section 129EE of the Customs Act, 1962. The interest was to be calculated from three months after the Supreme Court's order dated 31.03.2005. The court emphasized that the amount paid by the petitioner was not a duty but a pre-deposit, and thus, the doctrine of unjust enrichment did not apply. The writ petition was allowed with consequential relief, and no costs were awarded.

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