Unjust Enrichment not applicable on amount Deposited under Protest: CESTAT grants Refund with Interest [Read Order]

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that unjust enrichment does not apply to the amount deposited under protest.

Mr Anubhav Goel, Chartered Accountant appeared for the Appellant and Mr Gopi Raman appeared for the Respondent.

D.D. International Pvt Ltd, the Appellant is engaged in the processing and export of rice. They were issued– “Agri Infrastructure Incentive Scrips” (AIIS) under the Foreign Trade Policy 2009–14. The Appellant imported a rice polisher machine with spare parts and a colour sorter machine.

On the direction of DRI, the Appellant deposited Rs. 6,81,304/- vide demand draft dated 02.03.2017. Thereafter, a show cause notices dated 09.03.2017 was issued alleging that the machinery goods were not qualified for import under the subject scrips. Show Cause Notice was adjudicated on the contest and confirmed duty benefit availed along with equal penalty under Section 114A and Rs. 2 lakhs under Section 114AA of the Customs Act, 1962.

The Commissioner (Appeals), allowed the appeal and set aside the Order-in-Original. Thereafter, the Appellant filed a refund claim. The Deputy Commissioner observed that the bank confirmed the deposits of Rs. 17,01,269/- and Rs. 6,81,304/-. Further, the Appellant has submitted CA Certificate certifying that clause of unjust enrichment is not applicable.

It was urged that the machines imported be capital goods and not raw materials, no such machines are sold by way of trade, hence, there was no occasion to pass on the customs duty paid at the time of import. Further, the amount was paid under protest as they had deposited during the investigation and also during the pendency of the appeal. No unjust enrichment is attracted when the amount has been deposited after out-of-charge was given, more than 2 to 3 years after import.

A Coram comprising of Mr Anil Choudhary, Member (Judicial) observed that the clause of unjust enrichment is not attracted in case of a deposit during an investigation or pre-deposit during the appeal. Further viewed that the amount under refund claim was deposited partly during the investigation and partly during the pendency of the 1st appeal.

The amount deposited is found to be deposited under protest, ipso facto and is like a pre-deposit. The Tribunal held that the burden of unjust enrichment is not attractive and directed the Adjudicating Authority to grant the refund with interest @ 12% per annum from the date of deposit till the date of refund.

To Read the full text of the Order CLICK HERE

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