Legal principle

The presumption of unjust enrichment under Section 28D applies to second-hand goods as much as to new ones, and a bare Chartered Accountant's certificate unsupported by records cannot rebut it, while recovery of an erroneous refund may be pursued in appeal without a simultaneous Section 28 show cause notice.

Court decision

The Tribunal allowed the Revenue's appeals by way of remand: it held the proceedings valid and a simultaneous Section 28 show cause notice unnecessary, held the Commissioner (Appeals) erred in ruling that unjust enrichment does not apply to second-hand goods, doubted the CA certificate issued after the documents were lost, set aside the Orders-in-Appeal, and remanded the cases to the original adjudicating authority for de novo decision after hearing both sides.

Facts

The respondents (M/s Bhagwan Electro Photo Copier and M/s B.E. Office Automation Pvt. Ltd.) imported reconditioned mainframes of photocopiers, which on examination were found to be old and used with the essential features of photocopiers. The Department enhanced the declared value, ordered confiscation redeemable on fine and penalty, and classified the mainframes as photocopiers under heading 9009.11 invoking Rule 2(a) of the Customs Tariff Act, 1975, attracting 40% basic customs duty instead of 25%. The CESTAT, Delhi, later set aside the Commissioner (Appeals)' orders on import control, classification and valuation, after which the importers claimed refund of the redemption fine, personal penalty and enhanced duty paid. The Assistant Commissioner sanctioned these refunds relying on a Chartered Accountant's certificate and audited balance sheets indicating the excess duty and fine had not been charged to the profit and loss account.

Key provisions

• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 28D, Customs Act, 1962 — Presumption that incidence of duty has been passed on to the buyer
• Section 129D, Customs Act, 1962 — Powers of Committee of Principal Commissioner of Customs or Chief Commissioners of Customs or Principal Commissioner of Customs or Commissioner of Customs to pass certain orders