1. The fact of the case is that the appellant filed refund application against the security deposit made towards the provisional assessment of Bills of Entry. The provisional assessment of Bills of Entry were made in the year 2004. The assessment was finalized in the year 2007. After finalization of the assessment, the appellant filed refund application for refund of security deposit made during the provisional assessment of Bills of Entry. The adjudicating authority vide Order-in-Original dated 4.12.2008 sanctioned the refund. However, the same was credited into Consumer Welfare Fund on the ground of unjust enrichment. Being aggrieved by the OIO, the appellant filed appeal before the Commissioner (Appeals), which came to be dismissed. Therefore, the appellant is before us.
2. Ms. Laxmi Menon, learned Advocate appearing on behalf of the appellant submits that at the time of provisional assessment, there was no provisions of unjust enrichment in respect of the refund arising from the finalization of provisional assessment. Therefore, the provision of unjust enrichment is not applicable. She submits that in the case of provisional assessment, the provision of unjust enrichment was brought in statute w.e.f. 13.7.2006 by amending Section 18 of the Customs Act, 1962, which has the prospective effect. In this regard, she placed reliance on the following judgment:-
(a) Mafatlal Industries Ltd. Vs. Union of India : 1997 (89) ELT 247 (SC), wherein the Hon'ble Supreme Court in para 95 has held as under:-
95. Rule 9B provides for provisional assessment in situations specified in Clauses (a), (b) and (c) of sub-rule (1). The goods provisionally assessed under sub-rule (1) may be cleared for home consumption or export in the same manner as the goods which are finally assessed. Sub-rule (5) provides that when the duty leviable on the goods is assessed finally in accordance with the provisions of these Rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be. Any recoveries or refunds consequent upon the adjustment under sub-rule (5) of Rule 9B will not be governed by Section 11A or Section 11B, as the case may be. However, if the final orders passed under sub-rule (5) are appealed against - or questioned in a writ petition or suit, as the case may be, assuming that such a writ or suit is entertained and is allowed/decreed - then any refund claim arising as a consequence of the decision in such appeal or such other proceedings, as the case may be, would be governed by Section 11B. It is also made clear that if an independent refund claim is filed after the final decision under Rule 9B(5) re-agitating the issues already decided under Rule 9B - assuming that such a refund claim lies - and is allowed, it would obviously be governed by Section 11B. It follows logically that position would be the same in the converse situation.
(b) Commissioner of Customs Vs. Hindalco Industries Ltd: 2008 (231) ELT 36 (Guj).
(c) Commissioner of Customs, Kandla Vs. Hindustan Zincs Ltd. - 2009 (235) ELT 629 (Tri-LB), wherein the Larger Bench in para 7.1 has held as under:-
7.1 Before we proceed further, the relevant provisions under Central Excise and Customs are proposed to be discussed:-Prior to its amendment in 1991, Section 11B did not have any provision for denial of refund on the ground of unjust enrichment. Further the Section also provided that relevant date in a case where duty of excise paid provisionally in the Act or the Rules made there under, shall be the date of adjustment of duty after the final assessment thereof. Rule 9B during the relevant time also provided that the duty provisionally assessed shall be adjusted against the duty finally assessed and if the duty provisionally assessed fell short of, or in excess of duty finally assessed, the assessee shall be required to pay or be entitled to refund as the case may be. When Section 11B was amended in 1991 and provision relating to unjust enrichment was introduced, the clause relating to provisional assessment as regards relevant date in Section 11B was omitted. It was re-introduced in 1-8-1998 in Section 11B and the Proviso providing that the refund relating to finalization of provisional assessment shall not be made except in accordance with the procedure under section 11B was introduced in Rule 9B on 25-6-99.
2.1 She further submits that even on the fact that whether the incidence of amount of security deposit was passed on or otherwise, the appellant have submitted C.A. certificate according to which the amount of refund was booked in the balance-sheet under the head of Loan and Advance as receivable from Customs. This shows that the incidence of refund amount was not passed on to any other person.
3. Shri Manoj Kumar, learned Assistant Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order.
4. On careful consideration of the submissions made by both sides and on perusal of the records, we find that Bills of Entry was provisionally assessed during the period 9.2.2004 to 2.12.2004 and the consignment was finally assessed by the Appraising Group VI on 23.5.2007. At the time of provisional assessment, there was no provision of unjust enrichment in case of a refund arising out of the final assessment in terms of Section 18 of the Customs Act, 1962. The provision of Section 18 prevailing during the period of provisional assessment must be considered as held in the various decision, such as Mafatlal Industries Ltd. Vs. Union of India : 1997 (89) ELT 247 (SC) in para 95 and also in the case of Hindalco Industries Ltd. (supra). The Larger Bench in the case of Hindustan Zinc Ltd. (supra) also held that if the provisional assessment is made before the amendment of Section 18 by which the unjust enrichment provision was brought w.e.f. 13.7.2006, the unjust enrichment in respect of provisional assessment made prior to such amendment will not be applicable. In view of this legal proposition, considering the facts of the case as the provisional assessment was made in 2004, the unjust enrichment provision is not applicable. Moreover, on perusal of the records, we find that the appellants have shown this refund amount as receivable under the head of Loan and Advance as receivable from Customs. The adjudicating authority in the original order though admitted that the amount of refund was shown as receivable but he expressed that it does not exclusively certified that the amount deposited with the Customs as security deposit has not been recovered from the customers. We do not agree with this contention of the adjudicating authority for the reason that once it is p
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roved that the amount of refund has been shown as receivable, then it is not possible that the same amount could have been recovered by any other means. Therefore, the treatment of this amount shown as receivable is evidence that the incidence of refund amount has not been passed on. However, we direct the adjudicating authority before re-processing the refund as to make sure that the amount shown as receivable from Customs under the head of Loan and Advance covered the amount of present refund. If it is found correct then the appellant is prima facie entitled for the refund and such amount will not be hit by unjust enrichment. 5. As per our above observation, the appeal is allowed by way of remand to the adjudicating authority for passing a fresh order.