The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai Bench, set aside an order for failure to examine the aspect of unjust enrichment in a dispute related to liquefied natural gas (LNG) import duty. The case arose from an appeal filed by Ratnagiri Gas & Power Pvt. Ltd. (RGPPL) against an order dated 19.08.2014 issued by the Commissioner (Appeals), Central Excise & Customs, Goa.
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Ratnagiri Gas & Power Pvt. Ltd. entered into an agreement with Gas Authority of India Limited (GAIL) on 02.02.2012 for the purchase of 1960086.950 MMBTU (85,000 cubic meters) of LNG on a high-seas sale basis. GAIL had initially imported 3,000,000 MMBTU (129,500 cubic meters) of LNG from Excelerate Energy Limited, Texas, USA. Of this, 1960086.950 MMBTU (85,000 cubic meters) was sold to RGPPL. When the vessel arrived at the port, both RGPPL and GAIL filed Bills of Entry (B/E) for their respective imports. RGPPL’s B/E No. 04/2011-12 dated 27.03.2012 was filed for provisional assessment. However, due to a technical glitch in the LNG terminal, unloading was terminated midway, and only 311837.03 MMBTU (12,000 cubic meters) of LNG was discharged. The remaining quantity was not imported and was later exported back.
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RGPPL requested a refund for the customs duty paid on the unimported LNG. The Assistant Commissioner of Customs finalized the assessment and determined the customs duty at Rs.4,72,98,000(4.72 crores), compared to the initially assessed duty of Rs.7,79,37,340(7.79 crore). RGPPL subsequently filed for a refund of Rs.3,06,39,340(3.06 crore) for the excess duty paid. While the original authority sanctioned the refund, it credited the amount to the Consumer Welfare Fund (CWF), citing the lack of proof that the duty burden was not passed on. The Commissioner (Appeals) later modified the order and sanctioned only Rs.30,39,991(30.39 lakh) to be refunded, with the rest credited to the CWF.
CESTAT reviewed the case and noted that the authorities had failed to examine the unjust enrichment aspect thoroughly. The tribunal observed that RGPPL had submitted financial records, Chartered Accountant certificates, and ledger accounts to substantiate its claim that the duty burden had not been passed on. It found merit in RGPPL’s argument that in cases of provisional assessment where the entire quantity is not discharged, unjust enrichment should not apply. CESTAT referred to previous decisions in Petronet LNG Ltd. and Hazira LNG Pvt. Ltd., supporting the contention that duty on un-imported goods should be refunded.
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The bench, comprising S.K. Mohanty, Member (Judicial), and M.M. Parthiban, Member (Technical), ruled that the authorities must reexamine the legal provisions concerning refunds under Section 18 of the Customs Act, 1962. They directed a fresh adjudication while ensuring RGPPL is given a reasonable opportunity to present further evidence.
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In conclusion, CESTAT set aside the impugned order and remanded the case for reconsideration.
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