Whether bar of unjust enrichment applies to the Security deposit made for project import?

PJ/Case Laws/2012-13/1384

Case:- IDMC LTD. VS COMMISSIONER OF CUSTOMS, MUMBAI-II

Citation: - 2012-TIOL-1969-CESTAT-MUMBAI

Brief fact: - The Appellant, M/s. IDMC Ltd., filed a Bill of Entry No. 123 dated 11/02/2004 for import of plate heat exchangers under project import. As per the procedure prescribed, the bill of entry was to be assessed provisionally on payment of 2% security deposit on project imports and the appellant deposited 2% security deposit amounting to Rs, 1,73,754/- on 12/02/2004. The bill of entry was assessed finally on completion of the project by giving the benefit under Project imports. The appellant filed a refund claim for refund of 2% security deposit which they had paid. The same was sanctioned but ordered to be credited in the Consumer Welfare Fund on the ground that the appellant failed to prove unjust enrichment under Section 27(2) of the Customs Act, 1962. The appellant preferred an appeal before the Commissioner (Appeals) who vide the impugned order upheld the order of the lower adjudicating authority. Hence the appellant is before Tribunal.

Appellant Contention:- The Learned counsel for the appellant submits that Section 27(2) relating to bar of unjust enrichment applies only in respect of duty and interest if any paid on such duty. It does not apply to any deposits made by the appellant at the time of assessment. He further submits that the cash security equal to 2% of CIF value of the goods is made as per Circular No.89/95-Cus dated 09/08/1995 issued by the CBEC. The said circular makes it absolutely clear that in respect of project imports, the importers are required to make a cash security equivalent to 2% of CIF value of the goods sought to be imported subject to a maximum of Rs.50 lakhs pending final assessment under the project imports scheme,. What has been deposited is only a cash security and not duty as evident from the circular issued by the CBEC and hence the issue of unjust enrichment is not applicable to the facts of present case.

Respondent Contention:- The learned AR appearing for the Revenue, on the other hand, relies on the judgment of this Tribunal in the case of Pride Foramer vs. Commissioner of Customs (Import), Mumbai 2006 (200) ELT 259 (Tri-Mum) = (2006-TIOL-598-CESTAT-MUM) wherein it was argued that deposits made during the adjudication proceedings should be treated as deposit of duty and would be subject to the doctrine of unjust enrichment.

Reasoning of Judgment:- The Tribunal held that in the case relied upon by Revenuethere was no conclusion to say that Pre-deposit of amounts would be construed as duty. In fact the Tribunal did not go into the question at all. In this case, the payment of cash security was made in terms of the Board's circular cited supra and the circular makes it abundantly clear that it is only a cash security and not any other payment. If that be so, the provisions of Section 27(2) which applies to duty and interest thereon, does not apply to cash securities made. Therefore, the question of providing unjust enrichment would not arise in the case of refund of cash securities. Therefore Tribunal set aside the impugned order and allows appeal with consequential relief.

Decision:- Appeal allowed with consequential relief

Comment:- The analogy drawn from this case is that cash deposits made under project imports are not covered by the principles of unjust enrichment.

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PJ/Case Laws/2012-13/1384

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