Revenue appeal dismissed as agents entitled to refund excess customs duty on ship stores during vessel conversion under CBEC Circular 58/97

CESTAT Hyderabad dismissed Revenue's appeal regarding refund of excess customs duty paid on ship stores and bunkers during vessel conversion from foreign to coastal run. The tribunal held that agents were entitled to refund under CBEC Circular No. 58/97 dated 06.11.1997, which prescribes provisional assessment at 110% of estimated consumption during coastal operations. Since duty was collected on estimated quantities and actual consumption was lower, excess duty was refundable. The tribunal followed precedent from Atlantic Shipping case where similar refund was allowed, confirming the procedure aims to recover duty only on actual consumption during coastal run.

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Issues:
The dispute revolves around the refund claim filed by the appellant after converting a foreign going vessel to coastal run and paying duty for consumables. The main issue is whether the excess duty paid on finalization of assessment, in this case, is refundable or not.

Adjudicating Authority's Findings:
The Adjudicating Authority found that the refund claim was filed within the stipulated time limit and that the duty incidence was not passed on to any other person by the claimant. The excess duty paid on finalization of the assessment was deemed refundable, as the consumables were still on board the vessel and the duty incidence on these consumables did not pass to others.

Commissioner (Appeals) Decision:
The Commissioner (Appeals) dismissed the appeal by Revenue, stating that the refund was properly granted following the directions of the Board provided in Circular No. 58/97-Cus dated 06.11.1997. It was held that the issue of refund in the case of conversion of a foreign going vessel to coastal run was covered by the Circular and there was no merit in the grounds of Revenue.

Tribunal's Decision:
The Tribunal heard the arguments of the Revenue and perused the records. It was noted that the refund was allowed based on the special procedure for determining duty liability on consumables during a coastal run of a foreign going vessel. The Tribunal found that the principles of unjust enrichment were not applicable in this case, as the consumables remained on board at the time of conversion into an ocean-going vessel.

Conclusion:
The Tribunal upheld the decision of the Adjudicating Authority and the Commissioner (Appeals), stating that there was no error in the impugned Order-in-Appeal. The appeal by Revenue was dismissed, and the refund was deemed valid based on the prescribed procedure for determining duty liability on consumables during a vessel's coastal run.

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