Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
Subject: Unjust Enrichment — refund – bar applicable in case of imported material used captively
It is directed to refer to the Hon’ble Supreme Court Order dated 4.2.2000 (Civil Appeal No.921 of 1992) in the case of UOI and others Vs.Solar Pesticide Pvt. Ltd. Reported in 2000 (116) ELT 401 (SC). The issue of applicability of unjust enrichment provision before granting refund under Section 27 of the Customs Act,1962 was decided by the Ho’ble Bombay High Court in the case of M/s Solar Pesticides Pvt. Ltd. Stating that the said provision would not apply for goods imported and consumed captively. The Department filed civil appeal in the Apex Court against the impugned order of the Hon’ble Bombay High Court.
2. The Apex Court, in its judgement reported above has held that the principle of unjust enrichment would be applicable in respect of cases of refund of duty paid on imported raw materials even if captively consumed in the manufacture of a final product. The Hon’ble Supreme Court has held that even for captive consumption of goods if certain duties have been paid, whose refund is claimed, the claimant will have to establish that the incidence of duty has not been passed on, directly or indirectly, to any other person.
3. The provisions of refund in the Central Excise Act are similar to those of the Customs Act, a number of Civil Appeals where being filed by the Department against Tribunal Judgements relying on the case of M/s Solar Pesticide Pvt. Ltd. Of the Bombay High Court. The Hon’ble Supreme Court has favourably disposed offone such Civil Appeal No. 7189 of 1999 in the case of Collector of Central Excise, Meerut Vs. M/s Star Paper Mills Ltd. relying on its own order issued on 4.2.2000 as mentioned above.
4. The above mentioned judgement is brought to your notice for taking appropriate action in the cases pending or decided where certain refunds were given subject to bonds/undertakings by various parties including importers and manufacturers.
5. Field formations may be suitably informed.