By TIOL News Service

MUMBAI, DEC 31, 2012: THE appellant filed a Bill of Entry in the month of February, 2004 for import of plate heat exchangers under Project Import. As per the procedure prescribed by the Board vide Circular 89/95-Cus. 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 by the adjudicating authority 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.

Since the Commissioner (Appeals) upheld the order of the lower adjudicating authority the appellant is before the CESTAT and submits that the bar of unjust enrichment is applicable only in respect of duty & interest thereon but does not apply to the cash security made, in terms of Board Circular 89/95-Cus, by the appellant at the time of assessment.

The Revenue representative cited the decision in Pride Foramer - (2006-TIOL-598-CESTAT-MUM) to submit that deposits made during the adjudication proceedings should be treated as deposit of duty and would be subject to the doctrine of unjust enrichment.

The Bench observed -

"5. I have carefully considered the rival submissions. In the case relied upon by Revenue the deposit was made pursuant to an order dated 31/10/2001 from the hon'ble Bombay High Court. Ultimately, in that case, inasmuch as the appellant has proved that he has not passed on the incidence of duty, refund was granted. In the said judgment there 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 the case before us, 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."

In fine, the order of the lower authority was set aside and the appeal allowed with consequential relief.

(See 2012-TIOL-1969-CESTAT-MUM)