Importer wins refund of Rs. 86 lakh custom duty for World Bank project machinery under Notification 84/97-Customs

Gujarat HC allowed petition for refund of custom duty paid under protest. Petitioner imported four machines for World Bank project with valid state government certificate. Court held petitioner entitled to exemption under Notification 84/97-Customs for World Bank aided project machinery. Custom authorities directed to reassess Bills of Entry granting exemption and refund Rs. 86,00,068 with statutory interest within twelve weeks. Court found no unjust enrichment as petitioner produced chartered accountant certificate confirming duty burden not passed to others.

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Issues Involved:
1. Entitlement to refund of custom duty paid under protest.
2. Requirement of re-assessment of Bills of Entry for refund.
3. Delay in issuance of project authority certificate by the State Government.
4. Applicability of Notification No. 84/97-Customs dated 11.11.1997.
5. Compliance with provisions of Section 27 and Section 149 of the Customs Act, 1962.
6. Unjust enrichment and certification by Chartered Accountant.

Issue-wise Detailed Analysis:

1. Entitlement to Refund of Custom Duty Paid Under Protest:
The petitioner, a Private Limited Company engaged in road construction, imported four road construction machineries for a World Bank Aided project. The petitioner cleared the goods by paying custom duty under protest due to a delay in the issuance of the project authority certificate by the State of Gujarat. The petitioner applied for a refund of the custom duty paid under protest, supported by a Chartered Accountant's certificate confirming that the duty burden was not passed on to any other party. The court found that the petitioner is entitled to a refund as the delay in issuing the certificate was not attributable to the petitioner.

2. Requirement of Re-assessment of Bills of Entry for Refund:
The respondent authorities issued a deficiency memo requiring copies of re-assessed Bills of Entry for processing the refund. The petitioner contended that re-assessment was unnecessary. The court, however, held that re-assessment of the Bills of Entry is required under Section 149 of the Customs Act to process the refund, as per the standing order No. 27/2019 and the Supreme Court's decision in ITC Limited vs. Commissioner of Central Excise.

3. Delay in Issuance of Project Authority Certificate by the State Government:
The petitioner applied for the project authority certificate five months before importing the machinery, but the certificate was issued only after the goods were cleared. The court recognized that the delay was on the part of the State Government and not the petitioner. Therefore, the petitioner should not be deprived of the exemption from custom duty due to this delay.

4. Applicability of Notification No. 84/97-Customs dated 11.11.1997:
Notification No. 84/97 exempts goods imported for World Bank Aided projects from custom duty, provided a project authority certificate is produced. The court found that the petitioner met the conditions of the notification, as the machinery was used for a World Bank project approved by the Government of India, and the certificate was eventually issued by the State Government.

5. Compliance with Provisions of Section 27 and Section 149 of the Customs Act, 1962:
The court referred to the Supreme Court's decision in ITC Limited, which requires that a refund application under Section 27 cannot be granted without modifying the assessment order and re-determining the duty. The court directed the respondent authorities to reassess the Bills of Entry under Section 149 of the Customs Act based on the project authority certificate to process the refund.

6. Unjust Enrichment and Certification by Chartered Accountant:
The petitioner provided a Chartered Accountant's certificate stating that the custom duty paid under protest was not passed on to any other party, ensuring no unjust enrichment. The court accepted this certificate, concluding that there was no unjust enrichment and the petitioner was entitled to a refund.

Conclusion:
The court directed the respondent authorities to reassess the Bills of Entry for the import of the four machines, granting the benefit of exemption under Notification No. 84/97 and refund the custom duty paid under protest amounting to Rs. 86,00,068/- within twelve weeks, along with statutory interest if applicable. The rule was made absolute to this extent, with no order as to costs.

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