Whether unjust enrichment applicable to refund claim of interest paid on warehoused goods?

PJ/Case Law/2013-14/2085

Case:-M/s HITACHI HOME AND LIFE SOLUTIONS (INDIA) LTD VERSUS COMMISSIONER OF CUSTOMS, AHMEDABAD.

Citation:-2014-TIOL-127-CESTAT-AHM

Brief Facts:-This appeal has been filed by the appellant against OIA No. 131/2009/Cus/Commr.(A)/AHD dt. 18.05.2009 under which OIO No.17/DC/ICD/IMP/2008 dt. 17.03.2008 was upheld and appellants appeal rejected. Under this OIA dt. 18.05.2009 first appellate authority has held that applicability of unjust enrichment in the case of appellant was already decided as per OIA No.23/2007-AHD/Cus/Commr.(A)/AHD dt. 28.02.2007 and the appellant is accordingly precluded to file another appeal on the same issue. First appellate authority has also upheld the OIO dt. 17.03.2008 on merits with respect to refund of interest.

Appellant contentions:-The appellant argued that principle of unjust enrichment are not applicable to the refund claim of interest as per the following case laws:
i.      Commissioner of Customs (Import), Mumbai Vs. Amtrex Hitachi App. Ltd. [2008 (224) E.L.T. 292 (Tri. - Mumbai) = (2008-TIOL-376-CESTAT-MUM)

ii.            Ashok Leyland Vs. Commissioner [2001 (138) E.L.T. 339 (Tri. - Chennai)]

iii.           J.K. Synthesis Ltd. Vs. Collector [1999 (109) E.L.T. 669 (Tribunal)]

iv.   C.C.E., Raipur Vs. Hira Cements [2006 (194) E.L.T. 257 (S.C.)] = (2006-TIOL-08- SC)] = (2006-TIOL-08-SC-CX)
It was also emphasized by the learned Advocate that as per para 5 of the OIA No.23/2007- AHD/Cus/Commr.(A)/AHD dt. 28.02.2007 a table was annexed for the guidance of the adjudicating authority and also with the direction that adjudicating authority may also take the help of a Chartered Accountant. That appellant submitted all the details as per the annexure alongwith CA's certificate to the extent that interest paid has not been recovered.

Respondent contentions:-Shri G.P. Thomas (AR) appearing on behalf of the Revenue defended the order passed by the first appellate authority.

Reasoning of Judgment:-Heard both sides and perused the case records. With respect to the first ground for rejecting the appeal filed by the appellant, the first appellate authority has held that issue of unjust enrichment was already decided by Commr.(A) as per OIA dt. 28.02.2007. However, it is observed that following observations were made in para 5 by the appellate authority in its OIA dt. 28.02.2007:
"5. In my opinion, justice demands that some more information is obtained from the appellant to arrive at any definite conclusion, instead of straightway rejecting the claim. I therefore drafted a table, which is annexed to this order, in which the appellant should submit the required information to the lower authority in about a month's time (columns # 15 & 16 of the table also specify that certificates from a chartered accountant should be submitted), whereupon the lower authority shall examine the submitted information, especially in columns #15 & 16. The DCC may take up help of a chartered accountant, if necessary. If it is found that the claimed amount was always accounted for as a receivable ab initio right up to date, the appellant would have obviously proved that the incidence of interest was not passed on. The DCC shall then sanction the refund (recalculated if necessary) and pay the amount to the appellant. If it could not be so proved by the appellant, the claim may be rejected.
6. The appeal is disposed of in above terms."
It is evident from the above that Commr.(A) under OIA dt. 28.02.2007 did not finally hold that unjust enrichment is applicable in this case. He rather remanded the matter to the adjudicating authority to come to a conclusion whether appellant has recovered the amount of refund claimed or not by providing a draft annexure for such verification. The adjudicating authority also again held that unjust enrichment is applicable in this case. Further, it has been held by the order of this very bench in the case of Commission of Customs (Import), Mumbai Vs. Amtrex Hitachi App. Ltd. [2008 (224) ELT. 292 (Tn. - Mumbai)] = (2008-TIOL-376-CESTAT-MUM) that provisions of Sec. 27 of the Customs Act, 1962 will not be applicable to the refund of interest under Sec. 61(2) of the Customs Act, 1962. Following has been held in para 4 & 5 of this order:
"4. As against the above reproduced findings, the Revenue has contended that the question of unjust enrichment will apply even to these refunds. To my mind, CBEC vide Circular No. 475/30/90-Cus.VII dated 8-8-1990 had clearly clarified as under:
"It has been advised that warehousing interest levied under Section 61(2) of the Customs Act is distinguishable from Customs duty defined under Section 2(xv) ibid. Accordingly, provisions of Section 27 will not apply to refund of interest recovered under Section 61(2). However, the period under the Limitation Act may be applicable."
I also find that the Tribunal in the case of J.K. Synthetics Ltd. v. CC, Jaipur as reported at 1999 (109) E.LT. 669 (Tri.) upheld the said Circular as correct and allowed the appeal of the assessee and directed that authorities to refund the amount of interest. I find that the issue is no more res integra and the Commissioner's (Appeals) order does not suffer from any infirmity. The appeal filed by the Revenue is rejected. (Dictated and pronounced in Court)"
A similar view has also been taken by CESTAT in this case of Ashok Leyland Vs. Commissioner [2001 (138) E.L.T. 339 (Tri. - Chennai)] which has been upheld by Supreme Court [2002 (141) ELT. A 182 (S.C.)]. In view of the above appellant's refunds of interest, paid as per the provision of Sec. 61(2) of the Customs Act, 1962, will not be hit by the doctrine of unjust enrichment. Appeal filed by the appellant is thus allowed.

Decision:- Appeal allowed.

Comment:-The essence of this case is that the refund of interest paid on warehoused goods is not covered by the provisions of section 27 of the Customs Act, 1962 and so the principle of unjust enrichment is also not applicable for such refund claims. This view has also been affirmed by the Apex Court in the case of Ashok Leyland.

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PJ/Case Law/2013-14/2085

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