Commissioner of Customs Vs Arcelormittal Nippon Steel India Private Limited (Gujarat High Court)
Summary: The Gujarat High Court dismissed Revenue’s appeal concerning the applicability of unjust enrichment to a customs refund arising from finalisation of a provisional assessment before the amendment of Section 18 of the Customs Act, 1962, effective from 13 July 2006. Revenue had challenged the CESTAT’s order dated 20 September 2011. The first appellate authority had allowed the assessee’s claim after considering its Chartered Accountant’s certificate, and the CESTAT had upheld that decision, noting that both finalisation of the provisional assessment and the letters claiming refund preceded 13 July 2006. Both parties submitted before the High Court that the issue stood settled by the Supreme Court’s decision dated 23 March 2023 in Commissioner of Customs v. Hindustan Zinc Limited through its Managing Director. The High Court referred to the distinction between refunds consequent upon finalisation of provisional assessments and independent refund claims, as explained in the authorities discussed in that decision.
It also noted that the principles of unjust enrichment contained in Section 27 could not be read into Section 18 before its amendment. The reproduced Supreme Court ruling followed Allied Photographics and confined Sahakari Khand Udyog Mandal to its facts, having regard to the earlier authorities and paragraph 104 of Mafatlal Industries. Applying that ruling, the High Court answered the substantial question of law in favour of the assessee and against Revenue and dismissed the appeal.
Cases Discussed
- Commissioner of Customs v. Hindustan Zinc Limited through its Managing Director — Civil Appeal No. 10691 of 2011 and allied matters, decided on 23.03.2023 (Supreme Court). Followed as settling the issue; the Supreme Court upheld the impugned decisions applying Allied Photographics and dismissed Revenue’s appeals.
- Commissioner of Customs v. Hindalco Industries Limited — 2008 (231) ELT 36 (Guj.) (Gujarat High Court). Referred to for the conclusion that Section 27’s unjust enrichment provisions could not be read into Section 18 before 13 July 2006.
- Sahakari Khand Udyog Mandal Ltd. v. Commissioner of Central Excise & Customs — (2005) 3 SCC 738 (Supreme Court). Discussed in the reproduced Hindustan Zinc ruling, which confined the decision to its facts because the earlier ruling in Allied Photographics and the specific observations in Mafatlal Industries had not been considered.
- Commissioner of Central Excise, Mumbai-II v. Allied Photographics India Ltd. — 2004 (166) ELT 3 (S.C.); (2004) 4 SCC 34 (Supreme Court). Relied upon for the distinction governing refunds consequent upon finalisation of provisional assessments.
- Commissioner of Customs, New Delhi v. M/s Oriental Exports, New Delhi — 2003 (156) ELT 161 (Supreme Court). Cited within the reproduced Hindustan Zinc ruling while discussing the treatment of provisional-assessment refunds.
- Mafatlal Industries Ltd. & Ors. v. Union of India & Ors. — (1997) 5 SCC 537, as cited in the supplied judgment (Supreme Court). Paragraph 104 was reproduced to explain the distinction between refunds consequent upon adjustment under Rule 9-B(5) and refund claims arising from appellate proceedings or independent claims.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Heard Mr. Param V. Shah, learned Senior Standing Counsel for the appellant and Ms. Dimple K. Gohil, learned advocate for the respondent.
2. The present appeal is filed under Section 130 of the Customs Act, 1962 (for short ‘the Act’) by the appellant – Revenue against the order dated 20.09.2011 passed by the Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad (for short ‘CESTAT’) in Appeal No.C/770/06.
3. This appeal was admitted by order dated 19.6.2012 for consideration of the following substantial question of law :-
“Whether the principle of unjust enrichment is applicable to the refund arising out of finalisation of the provisional assessment pending before amendment of Section 18 of the Customs Act, 1962 ?”
4. At the outset, learned advocates for both the sides submitted that the issue raised in this appeal is no more res integra in view of the decision of the Hon’ble Supreme Court in the case of Commissioner of Customs v. Hindustan Zinc Limited through its Managing Director rendered on 23.3.2023 in Civil Appeal No.10691 of 2011 and other allied matters.
5. On perusal of the order passed by the CESTAT, it appears that the first Appellate Authority decided the issue in favour of the assessee based upon the Chartered Accountant’s Certificate produced before him by the assessee to come to the conclusion that the issue of unjust enrichment is not arising in the case of refund on the basis of finalization of the provisional assessment.
6. The CESTAT also referred to the decision of the Larger Bench of the Apex Court in the case of Allied Photographics India Limited reported in 2004 (166) ELT 3 (S.C.) as well as the decision of this Court in the case of Commissioner of Customs v. Hindalco Industries Limited reported in 2008 (231) ELT 36 (GUJ.) wherein this Court has clearly held that the provisions of the principles of unjust enrichment as found in Section 27 of the Customs Act, 1962 cannot be read into provisions of Section 18 prior to the amendment of Section 18 w.e.f. 13.7.2006.
7. The CESTAT following the aforesaid decisions rejected the appeal of the revenue by observing as under :-
“It can be noted from the above that the law is now squarely settled to the effect that the provisions of unjust enrichment will not apply to the refund claims arising out of finalisation of provisional assessment under Section 18 of the Customs Act, 1962, prior to 13.07.06. In the case in hand, the finalisation of the provisional assessment took place prior to 13.07.06 and letters claiming the amounts were also filed prior to 13.07.06, hence we hold that the impugned order of the learned Commissioner (Appeals) is correct and there is no infirmity in the said order.”
8. The Hon’ble Supreme Court in the case of Commissioner of Customs v. Hindustan Zinc Limited through its Managing Director (Supra) has reiterated the decision in the case of Allied Photographics India Limited (Supra) as under :-
“In all these cases the common question which arises is whether claim for refund of amounts deposited towards provisional duty, as a condition for clearance of imported goods can be the subject matter of refund after conclusion of assessment proceedings and having regard to its outcome, under Section 18 of the Customs Act. It is not disputed that this issue has been considered both in the context of provisional assessment under Rule 9-B of the Central Excise Rules by judgments of this Court as well as in the context of Section 18 of the Customs Act, in “Commissioner of Customs, New Delhi vs. M/s Oriental Exports, New Delhi” [2003 156 ELT 161]. The Court held that even though Rule 9-B of the Customs Rules (applicable in that case) was not retrospective, nevertheless pending applications were entitled to the relief prescribed by it. This Court had occasion again to consider the issue in the light of the conflict of decision by a three Judge Bench, in a three Judge Bench decision in “Commissioner of Central Excise, Mumbai-II vs. Allied Photographics India Ltd.” [(2004) 4 SCC 34]. The Court held that the doctrine of unjust enrichment was not applicable to provisional assessment even after finalization of the proceedings.
The impugned judgments in all these appeals have followed view expressed in “Oriental” and “Allied”.
It is brought to the notice of this Court that a judgment subsequent to the ruling in “Allied” i.e. “Sahakari Khand Udyog Mandal Ltd. vs. Commissioner of Central Excise & Customs” [(2005) 3 SCC 738] appears to have expressed a different view in that the Court held that to maintain a claim for refund, the assessee has to establish that he or it had paid the amount for which relief is sought and had not passed on the burden to the consumers. This judgment though rendered by a three Judge Bench, overlooked the ruling in Allied (supra). Furthermore, even though the judgment has generally referred to the nine Judge Bench ruling in “Mafatlal Industries Ltd. & Ors. vs. Union of India & Ors.” [(1997) 5 SCC 537], nevertheless the specific observations in para 104 appears to have escaped the attention of the Court. Para 104 in Mafatlal Industries Ltd., is extracted below :
104. Rule 9-B provides for provision 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 provisional 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 9-B will not be governed by Section 11-A or Section 11-B 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 11-B. It is also made clear that if an independent refund claim is filed after the final decision under Rule 9-B(5) reagitating the issues already decided under Rule 9-B – assuming that such a refund claim lies – and is allowed, it would obviously be governed by Section 11-B. It follows logically that position would be the same in the converse situation. Nature and character of refund claims under the Central Excises and Salt Act and the Customs Act.”
The judgment in “Sahakari Khand Udyog Mandal Ltd.”, in this Court’s considered view, has to be confined to the facts of that case for the reasons mentioned above. In this view of the matter, there is no infirmity with the findings and conclusions recorded in the impugned judgments, which are in accord with the ratio in Allied (supra). The revenue’s appeals are, accordingly, dismissed.”
9. In view of the above dictum of law, we answer the question in favour of the assessee and against the revenue. Accordingly, the appeal is dismissed.
