Legal principle

Under the Customs Act, 1962, the bar of unjust enrichment is not applicable to the refund of redemption fine and penalty.

Court decision

The Tribunal held that the bar of unjust enrichment is not applicable to refunds of redemption fine and penalty under the Customs Act, 1962; finding no infirmity in the Commissioner (Appeals)'s order, it rejected the Revenue's appeal in favour of M/s. Umax Enterprises.

Facts

M/s. Umax Enterprises filed a Bill of Entry for import of various items including Chinese-origin cosmetics; on second check examination the cosmetic values were loaded on the basis of contemporaneous imports, as the value was mis-declared as un-branded, involving duty of Rs.2,12,000/- sought to be evaded. The goods were confiscated but allowed redemption on a fine of Rs.5,98,480/- with a penalty of Rs.1,20,000/-; on appeal these were reduced to Rs.50,000/- and Rs.30,000/- respectively with consequential relief. The respondents then filed a refund claim of Rs.6,43,480/-, which was sanctioned but credited to the Consumer Welfare Fund as hit by the bar of unjust enrichment. The Commissioner (Appeals) allowed the respondents' appeal, holding the refund beyond the scope of unjust enrichment under Section 27 and beyond the presumption of Section 28D of the Customs Act, 1962, and the Revenue appealed to the Tribunal.

Key provisions

• Section 28D, Customs Act, 1962 — Presumption that incidence of duty has been passed on to the buyer
• Section 27, Customs Act, 1962 — Claim of refund duty