Refund of duty on short landed goods-applicability of unjust enrichment

PJ/Case Laws/2011-12/1503

Case: M/S PETRONET LNG LTD v/s CC AHMEDABAD

Citation: 2011-TIOL-1652-CESTAT-AHM

Issue:- Whether bar of unjust enrichment applicable to refund claim of duty paid on short landed goods?

Brief Facts:- Appellant had filed a refund claim of differential amount of Customs duty arising out of finalization of provisional assessment of 19 bills of entry involving import of Liquefied Natural Gas (LNG) falling under CTSH 27111100 at C.H. Dahej. After initial scrutiny, deficiency memos were issued to the appellant for compliance as to certain original documents and for submission of evidences showing that the doctrine of unjust enrichment was not attracted to the subject refund claim. The appellant was, thereafter, called upon to show cause vide Show Cause Notice F. No. VIII/20-15 to 33/CUS/R/SRT/2009, dt. 8.5.09, as to why their refund claims should not be rejected on the ground of unjust enrichment. After examining the submissions and scrutinizing the documents submitted by the appellant, the adjudicating authority vide Order-in-Original sanctioned the refund claim under Section 27(2) of Customs Act, 1962, but the refund amount of Rs.2,28,20,806/- (Rupees Two Crore, Twenty Eight Lakhs, Twenty Thousands, Eight Hundred and Six only) were ordered to be credited to Consumer Welfare Fund established under Section 12C of Central Excise Act, 1944 on the ground of unjust enrichment.

Aggrieved by such order of the adjudicating authority, crediting of refund claim to Consumer Welfare Fund, the appellant preferred an appeal before Commissioner (Appeals). Commissioner (Appeals), after considering the issue, vide impugned order has sanctioned the refund claim of Rs.21,59,216/- and allowed the appeal of the assessee to that extent, but rejected the appeal of the assessee as regards credit to the Consumer Welfare Fund.

Appellant’s Contention:- Appellant contended that the there is no dispute that refund which has been claimed by them, was in respect of duty discharged by them of short landing of LNG. He further submitted that the findings of the Commissioner (Appeals) are contrary to the judgment of Hon'ble High Court of Mumbai in the case of Board of Trustees of the Port of Mormugao Vs UOI - 1993 (68) ELT 39 (Bom) . He submitted that in their own case, the Hon'ble High Court has held that refund in respect of short landed goods arises and will not be covered by the provisions of Section 27 of Customs Act, 1962. He also draws attention to the judgment of Tribunal in the case of Godrej & Boyce Mfg. Co. Vs Collr. of Customs 2001 (134) ELT 429, Textool Company Ltd Vs. CC Chennai 1999 (111) ELT 826, CC (Import) Nhava Sheva Vs KTR Coupling Pvt. Ltd. 2008 (226) ELT 236 and submit that in all these cases, the Tribunal had held that when there is short landing of goods, any duty paid on such short landed goods will not be covered by bar of unjust enrichment.

Reasoning of Judgment:- The Tribunal held that the undisputed fact is that the appellant is in appeal against the order of first appellate authority for upholding the order-in-original that the credit of amount of Rs.2,06,61,590/- (Rupees Two Crore, Six Lakhs, Sixty One Thousand, Five Hundred and Ninety only) pertaining to 7 Bills of Entry to Consumer Welfare Fund is correct. They find that there is no dispute that the refund claim of the 17 Bills of Entry was on account of short landing of the goods.

This factual position remains un-contraverted by the Revenue. On the basis of factual matrix, they have considered the submissions made by the appellant as regards applicability of unjust enrichment to the case in hand, wherein admittedly, the goods were short received. They find that the provisions of Section 27 were analysed by the Tribunal in the case of Godrej & Boyce Mfg. Co. (supra), wherein an identical issue was considered by the Bench.

The ratio of the judgment of the Bombay High Court squarely covers both the issues. Being the judgment of the High Court having jurisdiction over the appellant and the respondent Commissioner, it is binding upon them. Accordingly, they hold that the refund claim is not barred by limitation and the refund would have to be paid to the appellant.

Decision:- Appeal allowed with consequential relief.

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PJ/Case Laws/2011-12/1503

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