Tribunal Upholds Denial of Refund Claims on LNG Imports

The tribunal upheld the Commissioner (Appeals)'s order denying refund claims by M/s Shell Energy India Private Limited for customs duty paid on LNG imports. The appellant's accounting method failed to prove that unjust enrichment did not occur, as the duty was passed on as an expense. Both revenue and appellant appeals were dismissed, affirming the decision to credit the amounts to the Consumer Welfare Fund.

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Issues Involved:
1. Denial of refund claim by M/s Shell Energy India Private Limited.
2. Applicability of the doctrine of unjust enrichment to the refund claims.
3. Examination of refund claims for the period before and after 13.07.2006.
4. Evaluation of evidence provided by the appellant to rebut the presumption of unjust enrichment.

Detailed Analysis:

1. Denial of Refund Claim by M/s Shell Energy India Private Limited:
The appellant, M/s Shell Energy India Private Limited, engaged in importing Liquified Natural Gas (LNG), filed refund claims for customs duty paid on 24 bills of entry. The value and quantity declared were based on provisional invoices due to technical reasons that made it difficult to measure the exact quantity of LNG delivered. The customs duty was paid on a provisional basis, and after the final quantity was ascertained by an independent surveyor, the appellant sought refunds based on the actual quantity received.

2. Applicability of the Doctrine of Unjust Enrichment to Refund Claims:
The Assistant Commissioner initially sanctioned the refund claims but credited the amounts to the Consumer Welfare Fund, citing unjust enrichment. The Commissioner (Appeals) remanded the case, directing the Assistant Commissioner to re-examine the evidence, including balance sheets and Chartered Accountant Certificates, to determine if the burden of duty had been passed on.

3. Examination of Refund Claims for the Period Before and After 13.07.2006:
For the four bills of entry assessed provisionally before 13.07.2006 and finalized after this date, the Commissioner (Appeals) held that the doctrine of unjust enrichment did not apply, following the Gujarat High Court's decision in Hindalco Industries Ltd. The Assistant Commissioner, however, applied the amended provisions of Section 18 of the Customs Act, which included the doctrine of unjust enrichment, and transferred the refund amounts to the Consumer Welfare Fund. The Commissioner (Appeals) set aside this order, emphasizing that the Gujarat High Court's decision should be followed, even if challenged in the Supreme Court.

4. Evaluation of Evidence Provided by the Appellant to Rebut the Presumption of Unjust Enrichment:
The appellant argued that the excess duty paid was not passed on to customers, supported by invoices and balance sheets showing the refund amounts as "custom advance." However, the Commissioner (Appeals) noted that the balance sheets also included a corresponding provision for "custom advance," effectively nullifying the receivable entry and passing the duty as an expense in the profit and loss account. This accounting method did not convincingly rebut the presumption of unjust enrichment.

Conclusion:
The tribunal found that the appellant's method of accounting, which included creating receivables and corresponding provisions, resulted in the customs duty being passed on as an expenditure in the profit and loss account. Therefore, the appellant failed to discharge the burden of proving that unjust enrichment did not occur. Both the revenue's and the assessee's appeals were dismissed, upholding the Commissioner (Appeals)'s order.

Pronouncement:
The judgment was pronounced in the open court on 13.04.2022.

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