Legal principle

Excess duty paid on provisional assessment on an estimated basis (such as bunkers and ship stores for a coastal run) is in the nature of a deposit or notional amount, not duty, so the doctrine of unjust enrichment under Section 27 read with Section 28D does not apply and such refund cannot be credited to the Consumer Welfare Fund under Section 27(2).

Court decision

The Tribunal allowed the appellant's appeal, holding that the Commissioner (Appeals') order crediting the sanctioned refund to the Consumer Welfare Fund was not sustainable, and set that impugned order aside, restoring the refund to the appellant.

Facts

M/s Orissa Stevedores Ltd claimed a refund of Rs.5,99,239/- being duty paid in excess of the finally assessed duty on the provisional assessment of a Conversion Bill of Entry dated 01.02.2018 covering consumption of bunkers and ship stores during the coastal voyage of the vessel 'M.V. GANGA K'. The Assistant Commissioner sanctioned the refund by Order-in-Original dated 20.02.2019. On the Department's appeal, the Commissioner (Appeals) held that the refund had been sanctioned to the Agent for the Principal without examining the doctrine of unjust enrichment and directed that the amount be credited to the Consumer Welfare Fund under Section 27(2) of the Customs Act, 1962. The assessee then approached the Tribunal against that Order-in-Appeal dated 31.12.2020.

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