Unlawful levy refunds allowed where cess collected without authority - limitation and unjust enrichment inapplicable if incidence not passed on.

Cess collected on prawn/shrimp exports, having been held leviable without authority, is treated as deposits repayable rather than customs duty; refunds therefore follow. Refund claims are not time-barred where payments were made in proceedings challenging the levy and treated as paid under protest, rendering limitation inapplicable. The doctrine of unjust enrichment does not bar refunds where claimants produced credible evidence that the cess incidence was not passed on to foreign buyers. Consequently earlier rejections are set aside and appellants are entitled to refunds with consequential reliefs as per law.

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Issues: (i) Whether the cess paid on export of prawns/shrimps is to be treated as duty of customs or as deposits; (ii) Whether the refund claims are time-barred under Section 27 of the Customs Act, 1962; (iii) Whether the doctrine of unjust enrichment applies to the refund claims for cess collected on export of prawns/shrimps.

Issue (i): Whether the cess paid on export of prawns/shrimps is to be treated as duty of customs or as deposits.

Analysis: The Tribunal reviewed the judicial history including Supreme Court and High Court decisions establishing that prawns/shrimps are not ''fish'' within the schedule and that cess was not leviable. The adjudicating authorities and Refund Sanctioning Authority treated the collections as without authority of law and therefore as deposits refundable. The Tribunal considered the settled judicial pronouncements which held the levy/collection to be unlawful.

Conclusion: The cess collected on export of prawns/shrimps is to be treated as deposits (amounts collected without authority of law) and not valid duties.

Issue (ii): Whether the refund claims are time-barred in terms of Section 27 of the Customs Act, 1962.

Analysis: The Tribunal noted that appellants had challenged the levy before the jurisdictional High Court and appellate authorities, and that earlier orders of the Commissioner (Appeals) and this Tribunal held limitation inapplicable where payments were made under protest and levy was challenged. The Tribunal relied on settled decisions including Mafatlal and the subsequent final judicial rulings holding the levy unlawful, concluding that payments made in the background of such challenges are to be treated as paid under protest.

Conclusion: The refund claims are not time-barred; the limitation under Section 27 of the Customs Act, 1962 does not preclude the refunds in these cases.

Issue (iii): Whether the doctrine of unjust enrichment is applicable to these refund claims filed in the background of these facts.

Analysis: The Tribunal examined Chartered Accountant certificates produced by appellants which uniformly stated that the cess element was not passed on to foreign buyers. On that evidentiary basis, the Tribunal found appellants had established that the incidence of cess was not borne by buyers and therefore unjust enrichment did not arise. The Tribunal also considered the legal effect of the levy being unlawful.

Conclusion: The doctrine of unjust enrichment is not attracted; refunds should not be denied on that ground where appellants have satisfactorily shown the cess was not passed on to buyers.

Final Conclusion: The impugned Orders-in-Appeal rejecting the refund claims are set aside and the appeals are allowed; appellants are entitled to refunds of the cess paid with consequential reliefs as per law.

Ratio Decidendi: Where a levy is held to be unlawful and collections were made without authority of law, such collections are to be treated as deposits repayable; payments made in proceedings challenging the levy are deemed paid under protest rendering limitation inapplicable, and refunds may not be denied on unjust enrichment where credible evidence shows the tax incidence was not passed on to buyers.

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