TaxTMI 
TaxTMI 
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2025 (5) TMI 2028
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....e degummed soyabean oil of edible grade in bulk at Jamnagar and filed bill of entry on 02.09.2002 seeking clearance of the imported goods for home consumption. Customs department (department) did not clear the goods on the ground that appellant was required to pay higher customs duty on the basis of tariff value fixed for the imported goods in terms of Section 14(2) of the Customs Act, 1962 (referred to hereinafter as 'the Customs Act'). Contention of the appellant was that at the time of the import of the goods the concerned notification issued by Government of India fixing tariff value under Section 14(2) of the Customs Act had not come into effect. Therefore, appellant was liable to pay duty only in terms of the provisions contained in Section 14(1) of the Customs Act. 5. Since there was an impasse with the imported goods being held up, appellant filed Special Civil Application No. 9308 of 2002 before the High Court challenging the validity of the notification issued by the Government of India fixing the tariff value of the imported goods i.e. crude degummed soyabean oil (also referred to hereinafter as the 'subject goods') as also the date of coming into effect of the said not....
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....justified and lawful on the part of the department to claim the differential amount of duty on the basis of the said notification. The appeals were accordingly allowed only on this point without going into the other issues. 12. On 04.06.2016, appellant filed three similar refund applications before the department seeking refund of the differential duty amounts which were secured by means of the bank guarantees. Quantum of differential duty amounts collected by the department by encashing the bank guarantees are as under : (i) first writ petition: Rs. 9,19,801.00; (ii) second writ petition: Rs.45,99,006.00; and (iii) third writ petition: Rs. 22,25,052.00. 13. Department issued letter dated 17.06.2015 to the appellant raising two issues: first was regarding non-filing of refund application in proper format and the second was with regard to non-submission of documents like balance sheet, profit and loss account etc. for the relevant period to show that the claim of refund is not hit by the principle of unjust enrichment. 14. According to the appellant, in the facts of the present case, question of unjust enrichment did not rise and the said principle is certainly not appli....
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....ld process the refund applications in accordance with law. 18. Aggrieved thereby, the related special leave petitions were filed. By order dated 22.08.2016, this Court had issued notice and directed that no coercive steps be taken in the meantime. Finally, while hearing the special leave petitions on 04.03.2025, leave was granted. In the hearing held on 04.03.2015, I.A. No. 41371 of 2024 was allowed, by which the name of the appellant was changed from M/s. Ruchi Soya Industries Limited to M/s. Patanjali Foods Limited. 19. Mr. Balbir Singh, learned senior counsel for the appellant, assailing the impugned judgment submits that High Court misdirected itself by holding that the doctrine of unjust enrichment is applicable to the facts of this case and thereby dismissing the writ petitions. Learned senior counsel submits that the real substantive issue is whether forcible encashment of bank guarantees by the department which were offered as security by the appellant in terms of the interim order of the High Court, following dismissal of the writ petitions can be said to be the duty or the differential duty 'paid' by the appellant. 19.1. Learned senior counsel submits that provisions c....
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....arantees though this Court has upheld the contention of the appellant that no differential duty was required to be paid for the imported goods, has become totally unsustainable in law. In the circumstances, respondents should be directed to forthwith release the amounts illegally retained to the appellant. Therefore, impugned judgment and order is liable to be set aside. 20. Per contra, Ms. Nisha Bagchi, learned senior counsel appearing for the respondents submits that appellant had furnished bank guarantees, in all total three bank guarantees, covering the differential amounts of duty, the details of which are as under: Date Amount 09.10.2002 Rs.9,19,801.00 10.10.2002 Rs.45,99,006.00 24.10.2001 Rs.22,25,052.00 20.1. After the writ petitions were dismissed by the High Court on 13.09.2012, respondents encashed the bank guarantee for Rs.9,19,801.00 on 22.01.2013 and the other two bank guarantees on 28.01.2013. Respondents were under no legal injunction not to encash the bank guarantees after dismissal of the writ petitions. 20.2. She submits that though the appellant had filed three refund applications on 04.06.2015, it did not attach any relevant document in suppo....
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....e Act deal with the question of refund. Refund can be denied either in part or wholly by applying the doctrine of unjust enrichment. Before we examine the above concept, it would be apposite to refer to Section 27 of the Customs Act. Section 27(1) of the Customs Act as it stood at the relevant time reads thus: (1) Any person claiming refund of any duty- (i) paid by him in pursuance of an order of assessment; or (ii) borne by him, may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Customs or Deputy Commissioner of Customs- (a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, before the expiry of one year; (b) in any other case, before the expiry of six months, from the date of payment of duty and interest, if any, paid on such duty in such form and manner as may be specified in the regulations made in this behalf and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 28C) as the applicant may furnish to establish that t....
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.... him and that the incidence of such duty and interest had not been passed on by him to any other person. 24. This doctrine was examined by a nine-Judge Bench of this Court in Mafatlal Industries Ltd. Vs. Union of India ( 1997 ) 5 SCC 536. This Court considered various questions concerning refund of excise and customs duty collected contrary to law, in all its shades, and also examined the concept of unjust enrichment. Thereafter, the following propositions were culled out with the disclaimer that those are not exhaustive: i. Where a refund of tax/duty is claimed on the ground that it has been collected from the petitioner/plaintiff by misinterpreting or misapplying the provisions of the Central Excise Act or the Customs Act or by misinterpreting or misapplying any of the rules, regulations or notifications issued under the said enactments, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactments before the authorities specified thereunder and within the period of limitation prescribed therein. While no suit is maintainable in that behalf, writ jurisdiction under Article 32 or under Article 226 would be available. ii.....
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....or tribunal rendered in the case of another person. vii. In case of indirect taxes like central excise and customs duty, the tax collected without the authority of law shall not be refunded to the claimant unless he alleges and establishes that he had not passed on the burden of duty to a third party and that he has himself borne the burden of the said duty. viii. Both Section 11B of the Central Excise Act and Section 27 of the Customs Act provide for the purchaser making the claim for refund provided he is able to establish that he has not passed on the burden to another person. Section 11B of the Central Excise Act and Section 27 of the Customs Act therefore cannot be said to be a device to retain illegally collected taxes by the State. 25. In Oswal Agro Mills Ltd. Vs. Asstt. Collector of Central Excise, Division Ludhiana 1995 Supp. (3) SCC 65 (Oswal Agro Mills Ltd.1), this Court noted that there was a dispute between Oswal Agro Mills and the excise department as to whether the goods under dispute were liable to excise duty under tariff item No. 15(1) or 15(2). This Court upheld the contention of Oswal that the appellant was liable to pay excise duty under tariff item ....
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....t of the amount of excise duty. This Court answered the above question in the negative and held as follows: 10. The question, therefore, is whether it can be said that the furnishing of a bank guarantee for all or part of the disputed excise duty pursuant to an order of the court is equivalent to payment of the amount of the excise duty. In our view, the answer is in the negative. For the purposes of securing the revenue in the event of the revenue succeeding in proceedings before a court, the court, as a condition of staying the demand for the disputed tax or duty, imposes a condition that the assessee shall provide a bank guarantee for the full amount of such tax or duty or part thereof. The bank guarantee is required to be given either in favour of the principal administrative officer of the court or in favour of the revenue authority concerned. In the event that the revenue fails in the proceedings before the court the question of payment of the tax or duty, the amount of which is covered by the bank guarantee, does not arise and, ordinarily, the court, at the conclusion of its order, directs that the bank guarantee shall stand discharged. Where the revenue succeeds the amoun....
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....f the same. Constitution Bench approved the decision in Oswal Agro Mills 2 and held as follows: 35. Furthermore, in view of the enunciation of the law by this Court in Oswal Agro Mills 2, a bank guarantee which is furnished cannot be regarded as payment of excise levy which the Government is entitled to retain. The furnishing of a bank guarantee is ordered normally in order to ensure collection of dues. Where, however, the State, as in the present case, has been held not to be entitled to collect or realise vend fee after 25-10-1989 it cannot be allowed to invoke the bank guarantee and realise the amount of vend fee. What cannot be done directly cannot be done indirectly either. Furnishing of bank guarantee is only a promise by the bank to pay to the beneficiary the amount under certain circumstances contained in the bank guarantee. Furnishing of bank guarantee cannot tantamount to making of payment as it was to avoid making payment of the vend fee that bank guarantees were issued. The respondents, in other words, are not entitled to encash the bank guarantees and realise vend fee in respect of the period prior to 25-10-1989. 28. On the other hand, we find that the High Court h....
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....as the court which had permitted the revenue to encash the bank guarantee after vacating the stay order because of persistent default on the part of the applicant in paying the duty. Insofar the present case is concerned, it is true that in the initial round of litigation, High Court had dismissed the claim of the appellant that it was not required to pay higher customs duty in terms of Section 14(2) of the Customs Act but liable to pay duty only in terms of Section 14(1). After the High Court had dismissed the writ petitions, appellant had filed special leave petitions before this Court which upon leave being granted were registered as Civil Appeal Nos. 1808-1813 of 2013. It is also true that there was no interim order in those batch of civil appeals. But there was no direction either or leave granted by the High Court to the respondents to encash the bank guarantees furnished by the appellant on orders of the High Court covering the differential amount of duty. Without waiting for this Court to take a decision in Civil Appeal Nos. 1808-1813 of 2013, revenue displayed extreme haste and encashed the bank guarantees on 22.01.2013 and 28.01.2013 respectively. Ultimately, those civil ....