Custom, Excise & Service Tax Tribunal
Lorenzo Bestonso vs Commissioner Of Customs, Jnch on 4 August, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. C/85479/16 [Arising out of Orders-in- Appeal No. 567(CRC-I)/2015(JNCH)-Appeal-II dated 30/11/2015 passed by the Commissioner of Customs (Appeals-II), JNCH, Mumbai] For approval and signature: Honble Mr Ramesh Nair, Member(Judicial) Honble Mr. Raju, Member (Technical) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental: Yes
authorities?
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Lorenzo Bestonso
:
Appellant
VS
Commissioner of Customs, JNCH
:
Respondent
Appearance
Shri. P.A. Augustian, Advocate for the Appellants
Shri. Chatru Singh, Asstt. Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Honble Mr. Raju, Member (Technical)
Date of hearing: 4/8/2016
Date of decision /2016
ORDER NO.
Per : Ramesh Nair
This appeal is directed against Orders-in- Appeal No. 567(CRC-I)/2015(JNCH)-Appeal-II dated 30/11/2015 passed by the Commissioner of Customs (Appeals-II), JNCH, Mumbai, whereby Ld. Commissioner(Appeals) upheld the Order-in-Original dated 24/11/2014 and dismissed the appeal of the appellant.
2. The fact of the case is that the appellant Shri. Lorenzo Bestonso imported one branded Car, Ferrari 599-GTB and cleared vide Bill of Entry No. 781548 dated 9/4/2008 vide Sr. No. 344(2) of the Notification No. 21/2012 dated 1/3/2002 and cleared on payment of duty on 15/4/2008. The said vehicle then sold to Shri. Sanjay Sunil Dutt on 17/5/2008. DRI on investigation found that car is old hence Notification benefit of Sr. No. 344(2) of the Notification No. 21/2002 dated 1/3/2002 was wrongly availed by the appellant. The car was then seized from Shri. Sanjay Sunil Dutt, the legal owner of the car. Shri. Sanjay Sunil Dutt voluntarily deposited the duty of Rs. 52,25,502/- towards Customs Duty and Rs. 11,78,101/- towards interest (Total Rs. 64,03,603/-). The show cause notice was issued to the appellant and vide Order-in-Original dated 8/8/2012, the benefit of Sr. No. 344(2) of Notification No. 21/2002 dated 1/3/2002 was denied and consequential differential duty, fine and penalty was imposed against the appellant. The amount of Rs. 64,03,603/- voluntarily deposited by Shri. Sanjay Sunil Dutt on behalf of the appellant was appropriated and adjusted towards custom duty demand of Rs. 52,25,502/- and interest liability of Rs. 11,78,101/- and penalty of Rs. 64,03,603/- was imposed on Lorenzo Bestonso i.e. importer. On the appeal filed by the appellant, the Honble tribunal vide its Order No. A/538-542/13/CSTB/C-1 dated 5/3/2013 set aside the said Order on merits with consequential relief. Appellant then filed Misc. Application before this Tribunal for implementation of the above order. The Honble CESTAT vide order dated 5/3/2013 allowed the application. On this basis, the appellant filed a letter dated 8/7/2013 seeking refund of Rs. 64,03,603/- claiming the said amount was paid as pre-deposit pending investigation. Subsequently, the Honble Tribunal passed further orders dated 5/3/2013 on the appellants application for enforcing the aforesaid order of this Tribunal. The Tribunal in the order directed the adjudicating authority for granting the refund alongwith interest in accordance with law. The Adjudicating authority though sanctioned the refund claim but credited the same into consumer welfare fund. Being aggrieved by the order of the Adjudicating authority, the appellant filed the appeal before the Commissioner (Appeals) which came to be rejected vide the impugned order, therefore appellant is before us.
3. Shri. P.A. Augustian, Ld. Counsel for the appellant submits that the Tribunal in the order dated 9/9/2014 has clearly directed to the Commissioner of Customs, Nhava Sheva to refund the amount of pre-deposit made by the appellant within the period of 15 days from today along with interest in accordance with law. In view of this direction, department could not have credited the amount in consumer welfare fund. He further submits that the amount for which the refund is sought for is pre-deposit and provision of unjust enrichment is not applicable on the refund of pre-deposit amount. In this regard he placed reliance on the judgment in case of Assistant Collr. Of Cus. Vs. Anam Electrical Manufacturing Co. [1997(90)ELT 260)(S.C.)]. He further submits that even if the provisions of unjust enrichment is applicable in respect of refund of pre-deposit but in the present case import was made by the appellant as an individual for personal use therefore such import are excluded from the provisions of unjust enrichment, hence the unjust enrichment is not applicable. In this regard he placed reliance on the judgment in case of Dharmarajan Pillai Vs. CC, Cochin[2007(216) ELT 434]. Regarding the issue that the claim made by the importer and the amount of duty deposited by Shri. Sanjay Sunil Dutt on behalf of the importer, importer is entitle for refund. In this support he placed reliance on the decision of this Tribunal in case of Petroplus Internatinal Marketing Vs. CCE, Mangalore [2016(333) ELT 435].
4. Shri. Chatru Singh, Ld. Asstt. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that as per the Tribunal direction in its order dated 9/9/2014 the adjudicating authority was directed to give refund alongwith interest in accordance with law therefore the test of unjust enrichment has to be gone through by the Adjudicating authority. Merely because there was direction for the refund, unjust enrichment could not have been avoided by the adjudicating authority. As regard the exclusion from the unjust enrichment provision, he submits that the car was admittedly imported by the appellant as an individual but immediately on import it was sold to one Shri. Sanjay Sunil Dutt therefore the condition for personal use is not fulfilled therefore unjust enrichment is not applicable in the present case. Regarding the submission of Ld. Counsel that the refund is of pre-deposit hence unjust enrichment is applicable is not acceptable for the reason that Honble Supreme Court in the case of Sahakari Khand Udyog Mandal Ltd. Versus Commissioner of C. Ex. & Cus.[ 2005 (181) E.L.T. 328 (S.C.)] held that all the refund claim should be subject to Section 11B which pari materia to Section 27 of the Customs Act therefore even in case of pre-deposit unjust enrichment is applicable.
5. We have carefully considered the submissions made by both sides and perused the record.
6. As regard the admissibility of the refund, as of now there is no dispute as the Adjudicating authority has sanctioned the refund which has not been challenged by the department, therefore as regard the sanction of the refund, it attained finality. Now only issue to be decided whether the provision of unjust enrichment is applicable or otherwise. The appellant has vehemently argued that amount for which refund is sought for was paid during the investigation therefore the same is pre-deposit hence the provisions of unjust enrichment is not applicable. Honble Supreme Court in case of Sahakari Khand Udyog(supra) held that even if Section 11B is not applicable unjust enrichment is applicable for reason that person cannot be allowed to retain undue benefit. Relevant para is reproduced below:
48. From the above discussion, it is clear that the? doctrine of unjust enrichment is based on equity and has been accepted and applied in several cases. In our opinion, therefore, irrespective of applicability of Section 11B of the Act, the doctrine can be invoked to deny the benefit to which a person is not otherwise entitled. Section 11B of the Act or similar provision merely gives legislative recognition to this doctrine. That, however, does not mean that in absence of statutory provision, a person can claim or retain undue benefit. Before claiming a relief of refund, it is necessary for the petitioner/appellant to show that he has paid the amount for which relief is sought, he has not passed on the burden on consumers and if such relief is not granted, he would suffer loss.
It is also observed that in the present case appellant has paid duty, due to dispute in applicability of the notification therefore it cannot be said that pre-deposit is not duty therefore unjust enrichment is not applicable. Once the amount was paid as duty irrespective whether it was payable or otherwise, refund of the same has to compulsorily undergo the test of unjust enrichment as provided under Section 27 of Customs Act, 1962. We are therefore of the view that in the present case refund is required to be tested under the provisions of unjust enrichment as provided under Section 27.
We observed that though the car was imported by the appellant in individual capacity but it is admitted fact that immediately after import the car was sold. In the Section 27 clause(b) provisions of unjust enrichment is not applicable in case where duty and interest, if any, paid on such duty on imports made by an individual for his personal use. However in the present case, since the car was sold immediately after import, the condition of importers personal use is not fulfilled therefore the appellant cannot get relief on the basis of aforesaid clause (b) of subsection (2) of Section 27 of the Customs Act. The judgment relied upon by the Ld. Counsel in case of Dharmarajan Pillay(supra), on careful reading of the judgment, we find that in the said case the department has held that unjust enrichment is applicable for the reason that importer has liberty to sale the car. However, the car was not sold therefore Tribunal held that amount cannot be credited in consumer welfare fund only on the apprehension that the importer was at liberty to sale the car at any time after import. In the present case, admittedly the car was sold before filing the refund claim therefore the judgment of Dharmarajan Pillay(supra) is not applicable in the fact of the present case. We therefore hold that considering the facts of the present case though the car was imported by an individual but not for his personal use, the provision of unjust enrichment is clearly applicable and the lower authority has rightly credited the sanctioned refund claim into consumer welfare fund. As regard the contention of the Ld. Counsel that in the Tribunal order dated 9/9/2014 this Tribunal has directed the departmental authority to grant refund therefore at this stage the issue of unjust enrichment could not have been raised, we are of the view that this Tribunal directed the departmental authority to grant refund alongwith interest in accordance with law, therefore the issue of unjust enrichment could not have been avoided by the adjudicating authority. It is applicable in the facts of the present case therefore, we do not find any error in applying the provision of unjust enrichment for disposing the refund claim by the Adjudicating authority. As regard the issue raised by the appellant that though duty for which refund was sought for paid by the subsequent buyer of the car Shri. Sanjay Sunil Dutt, appellant is entitle for refund, we are of the view that irrespective whether duty was paid by a person other than the importer but in connection with the import made by the appellant, it has to be considered that duty was paid by the appellant only therefore only for the reason duty was paid by the Shri. Sanjay Sunil Dutt refund cannot be denied. We find that right from the stage of adjudication appellant claimed on law point that import being made by the appellant as a individual for personal use, unjust enrichment is not applicable. It is also observed that appellant has not produced sufficient documents to establish whether the incidence of refund amount has not been passed on to any other person or otherwise. We are therefore of the view that in the interest of justice one more opportunity can be given to the appellant to prove whether the incidence of duty for which the refund is sought for, has not been passed to any other person. We therefore remand the matter to the original adjudicating authority only for limited purpose to verify the factual aspect whether the incidence of duty has not been passed on to any other person or otherwise. Needless to say that Adjudicating authority after affording sufficient opportunity of personal hearing shall pass denovo adjudication order within a period of three months from the date of receipt of this order. Appeal is allowed by way of remand to the adjudicating authority.
(Order pronounced in court on_____________ ) Raju Member (Technical) Ramesh Nair Member (Judicial) sk 9 C/85479/16