Refund of cess collected without authority of law.

PJ/CASE LAW/2016-17/3138

Case:-COMMISSIONER OF CUSTOMS, CHENNAI VS M/s MADRAS ALUMINIUM CO LTD

Citation:- 2016-TIOL-1305-CESTAT-MAD

Brief Facts:- The issue involved in this case is regarding the denial of refund for cess collected without authority of law and applicability of unjust enrichment.

Reasoning of Judgement:-Law is well settled that what that is not due to the State should not be collected. Here is a case where cess was levied at the time of adjudication which was held to be unconstitutional and not leviable by the Apex Court in the case of Commissioner of Central Excise Vs. Tata Iron and Steel Co. Ltd. 2003 (154) ELT 343 (SC) = 2003-TIOL-94-SC-CUS.
The Hon'ble Supreme Court has also held that what that is not due to the State should not be collected in the cases of Salonah Tea Company Ltd. Vs. Superintendent of Taxes 1988 (33) ELT 249 (SC) = 2002-TIOL-504-SC-CT and alsoCommissioner Vs. ITC Ltd. 2006 (203) ELT 532 (SC) = 2006-TIOL-141-SC-CX.
Doctrine of unjust enrichment was embedded to the customs law with effect from 13.7.2006. The law in force at the time of import was not subject to such provision. When the law on levy and the remedial measure of law at the time of import was known to both sides at the time of occurrence of the event i.e. import, in absence of provision to the contrary, respondent was out of purview of test of unjust enrichment. Therefore, following the judicial discipline, there is no question of any withholding of refund due to the respondent when cess was not realizable from it.
Accordingly, Revenue appeal is dismissed on the ground of unjust enrichment by the State in the event of denial of refund. Further, in the absence of incorporation of the provision relating to presumption of burden of proof of unjust enrichment by assessee, respondent cannot be directed to discharge the burden of proof.

Decision-Revenue appeal dismissed

Comment- It is the settled principal of law that what is not due to the government shall not be collected. Therefore, since in the given case, the Cess has been collected without authority of law, so the question of withholding said amount does not arise. Hence, the cess was refundable to the assessee. Moreover, since the provisions of unjust enrichment was introduced in Customs w.e.f. 13.07.2016, the same cannot be applied for the prior period.

Prepared By-Neelam Jain

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PJ/CASE LAW/2016-17/3138

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