Custom, Excise & Service Tax Tribunal
Akash Stone Industries Ltd vs Commissioner Of Customs (I), Mumbai on 14 January, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. C/758/08 (Arising out of Order-in-Appeal No. 175/2008/MCH/AC/Gr.III dated 2.4.2008 passed by Commissioner of Customs (Appeals), Mumbai-I) For approval and signature: Hon'ble Mr. P.G. Chacko, Member (Judicial) ======================================================
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?
====================================================== Akash Stone Industries Ltd. Appellant Vs. Commissioner of Customs (I), Mumbai Respondent Appearance: Shri Rajendra Kumar, Advocate, for appellant Shri B.P. Pereira, Authorised Representative (JDR), for respondent CORAM: Hon'ble Mr. P.G. Chacko, Member (Judicial) Date of Hearing: 14.1.2010 Date of Decision: 14.1.2010 ORDER NO.................................
After hearing both sides, I note that the short question arising in this case is already covered by a decision of the Hon'ble High Court vide United Spirits Ltd. vs. CC(I), Mumbai 2009 (240) ELT 513 (Bom.). The question is whether the appellant is entitled to refund of the redemption fine and penalty paid by them in connection with import of certain goods. At the end of a litigation over the said import of goods, they had obtained a favourable order from the Commissioner (Appeals) and accordingly only lesser amounts of fine and penalty were payable by them vis-`-vis the higher amounts already paid by them. In this scenario, refund claims were filed in respect of the differential amounts of fine and penalty paid in excess. These refund claims were rejected on the ground of unjust enrichment. The decision of the original authority was sustained by the Commissioner (Appeals). Hence the present appeal of the party, wherein the main contention raised by the appellant is that the doctrine of unjust enrichment is not applicable to a claim for refund of redemption fine or penalty.
2. Learned counsel for the appellant submits that the above doctrine is applicable only to a claim for refund of duty and is not applicable to claims for refund of other amounts. In this connection, he relies on the Hon'ble High Court's decision in the United Spirits case. I have heard the learned JDR as well. Paragraphs 26 and 27 of the High Court's judgment are reproduced below for the sake of brevity:-
"26. We then come to the second question insofar as the fine imposed in pursuance to the confiscation. As noted, in appeal the amount of fine has been reduced. The question is whether redemption fine is also subject to the principles of 'unjust enrichment'? In the judgments referred earlier, the principles of 'unjust enrichment' have been applied in a case of duty, cess, tax, fees and the like. No judgment has been brought to our attention insofar as fine or penalty is concerned. Insofar as the case of Sahakari Khand Udyog (supra) is concerned, what was in issue was duty. The observations in paragraph No.31 would be applicable to the retention of a benefit by a person that is unjust or inequitable. This is based on the premise that the duty, fees or the like has been passed on. The law is settled that even if there is no statutory provision in the matter of refund, the principle of 'unjust enrichment' would still be attracted. The question is whether fine or penalty is also subject to the doctrine of unjust enrichment. The Customs Act, 1962 has specifically provided in Section 27(2) that when a person is claiming refund of duty and that if applicant is entitled to refund the amount will be credited in the fund subject to the proviso. In the instant case clause (a) to the first proviso. Section 2(15) defines 'duty', which means a duty of customs leviable under this Act. It does not include fine or penalty. Section 12 sets out the duties on goods. Section 111 provides for confiscation of improperly imported goods as set out therein. Section 125 of the Customs Act, 1962 reads as under:-
"125. Option to pay fine in lieu of confiscation:-
(1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods [or, where such owner is not known, the person from whose possession or custody such goods have been seized,] an option to pay in lieu of confiscation such fine as the said officer thinks fit:
Provided that, without prejudice to the provisions of the proviso to sub-section (2) of Section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon.
(2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1) shall, in addition, be liable to any duty and charges payable in respect of such goods."
27. The Act itself, therefore, provides that instead of goods being confiscated on a fine being imposed and passed, the goods can be released. The fine, therefore, is in the nature of re-compensation to the State for the assessee having committed a wrong. That section further provides under sub-section (2) that the fine in lieu of confiscation is in addition to the duty and charges payable in respect of such goods. Under Section 126, if confiscation was ordered the goods would vest in the Government. Therefore, the fine basically is for a wrong done. It is, therefore, not a duty, tax, cess, fees or the like which can be passed on to a consumer."
3. In the light of the above ruling of the High Court, it is held that the refund claims in question are not to be rejected on the ground of unjust enrichment inasmuch as the doctrine of unjust enrichment is not applicable to any claim for refund of fine or penalty as held by the Hon'ble High Court. The original authority is directed to effect cash refund of the amounts to the appellant as early as possible, at any rate within a period of 30 days from the date of receipt of a certified copy of this order.
4. The appeal stands allowed.
(Pronounced in Court) (P.G. Chacko) Member (Judicial) tvu 1 4