Provision of unjust enrichment not applicable in case of inadvertent excess payment of interest - It is in the nature of deposit and not as Duty

Last updated: 19 February 2016

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Court :
CESTAT, Mumbai

Brief :
The Hon’ble CESTAT, Mumbai relying upon the case of Commissioner of Customs, Cochin Vs. Rajesh Chemicals – [2006 (196) E.L.T. 64 (Tri-Bang)], held that the provision of unjust enrichment wouldn’t be applicable as the excess amount paid by mistake was in the nature of deposit and not duty. It was further held that the Chartered Accountant’s certificate produced by the Appellant showing excess paid interest not passed on and said amount stands recoverable in the Books of Account of the Appellant, proves unjust enrichment even though the test of unjust enrichment was not applicable in the instant case.

Citation :
Wind World India Ltd. Vs. Commissioner of Customs (IMP.), Mumbai-II

Wind World India Ltd. Vs. Commissioner of Customs (IMP.), Mumbai-II [2016 (1) TMI 420 - CESTAT Mumbai]

Facts:

Wind World India Ltd. (“the Appellant”) imported certain capital goods valued at Rs. 2,87,67,110/- for manufacturing of Parts of Wind Operated Electricity Generators under EPCG Licence dated June 23, 2000. No further imports were made against the aforesaid EPCG license and the Appellant approached the DGFT for finalization of the export obligation against the said EPCG licence. Accordingly, DGFT directed the Appellant to pay Customs duty foregone for such import along with interest for the shortfall of export obligation. The Appellant had mistakenly calculated interest at the rate of 24% instead of 15% as provided in Para 5.14 of Handbook of Procedures and thus, the Appellant had deposited an excess amount of interest of Rs. 11,97,763/-. The Appellant made an application for refund of amount of excess interest, however, in absence of any audited or authentic document, the Adjudicating Authority credited the refund to the Consumer Welfare Fund.

Held:

The Hon’ble CESTAT, Mumbai relying upon the case of Commissioner of Customs, Cochin Vs. Rajesh Chemicals – [2006 (196) E.L.T. 64 (Tri-Bang)], held that the provision of unjust enrichment wouldn’t be applicable as the excess amount paid by mistake was in the nature of deposit and not duty. It was further held that the Chartered Accountant’s certificate produced by the Appellant showing excess paid interest not passed on and said amount stands recoverable in the Books of Account of the Appellant, proves unjust enrichment even though the test of unjust enrichment was not applicable in the instant case.

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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