By TIOL News Service

AHMEDABAD, MAY 15, 2014: THE issue involved is rejection of refund of deposit of duty made during the provisional assessment. The Appellant had imported ICs, Transistors etc. at Air Cargo Complex Ahmedabad and the said goods were cleared vide Bill of Entry No.6757/98 dated 27.10.1998. The said consignment was detained by the Customs officers on the ground that the prices shown in the said bill of entry and invoice were very low. The detained goods were released provisionally on execution of the requisite bonds and on payment of differential duty of Rs.10 ,00,000 /- and Rs.7,50,000/-

The Tribunal finally decided the matter in favour of the appellant. The claim of refund for the duty of Rs 17 ,50,000 /- paid by the appellant was credited to consumer welfare fund by the Adjudicating Authority on the ground of unjust enrichment. The same has been upheld by the Appellate Authority. Aggrieved by the same, the appellants are before the CESTAT.

After hearing both sides, the Tribunal held:

It is undisputed that the appellant had filed bills of entries on 27.10.1998 and 01.01.1999 which were provisionally assessed. The Appellant filed refund claims after a favourable order from the Tribunal. The Commissioner (Appeals) has not addressed himself to the issue in hand in a proper perspective. It is undisputed that the provisions of Section 18 talks about provisional assessment of bills of entries and any refund or shortage of duty due to finalization of bills of entries has to be made good. It is also seen that during the relevant time, Section 18 of the Customs Act did not have the clause of unjust enrichment. As the disputed period is prior to amendment of section 18 i.e. before 14.07.2006 and the assessment being provisional, the provisions of unjust enrichment are not applicable

Even though the deposit made before adjudication of demand and it got appropriated against a demand of duty, if there is a contest to the said demand in form of appeal, it is a settled law that the nature of deposit remained as a pre-deposit stood maintained. On setting aside the demand order by Tribunal, the action of appropriation of amount of deposit in duty and the whole order-become nonexistent and such order cannot be of any help for the revenue to treat the amount deposited as a duty. Therefore, as the amount of deposit still remains as deposit, the doctrine of unjust enrichment to such a refund claim is not applicable.

(See 2014-TIOL-765-CESTAT-AHM)