ORDER
P.G. Chacko, Member (J)
1. Examined the records and heard both sides. The original authority sanctioned a claim of the appellants for refund of customs duty but credited the amount to the Consumer Welfare Fund after holding that the claim was hit by unjust enrichment. The decision of the original authority was upheld by the first appellate authority in an appeal preferred by the party. Hence this appeal.
2. The refund claimed was of customs duty paid on capital goods imported by the appellants under EPCG Scheme. The short question arising in this case is whether the doctrine of unjust enrichment embodied in Section 27 of the Customs Act is applicable to the capital goods. Ld. Commissioner (Appeals) took a view that the Apex Court’s ruling in Union of India v. Solar Pesticides Pvt. Ltd. -2000 (116) E.L.T. 401 (S.C.), relating to claim of refund of duty paid on imported raw material, was equally applicable to a claim of refund of duty paid on imported capital goods. This view is under challenge in this appeal, and this challenge is on the strength of case law. Ld. Consultant has relied on the following decisions :
(1) Golden Iron & Steel Forgings v. Commissioner of Customs, Mumbai -2003 (157) E.L.T. 650 (Tri. - Del.) (2) Pearl Beverages Ltd. v. Commissioner of Customs, Chennai - 2004 (168) E.L.T. 92 (Tri. - Del.) 3. On the other hand, ld. DR relies on the Tribunal's decision in Commissioner of Customs (Import), Mumbai v. Godrej & Boyce Mfg. Co. - 2001 (135) E.L.T. 878 (Tri. - Mumbai) and submits that the Apex Court's ruling in Solar Pesticides (supra) is applicable to the instant case.
4. The question now is whether the Apex Court’s ruling in Solar Pesticides (supra) is applicable to a claim for refund of customs duty paid on imported capital goods. This question stands settled in the case of Grasim Industries v. Commissioner of Central Excise, Chennai-III – 2003 (157) E.L.T. 123. The relevant portion of the Tribunal’s order is extracted below :-
“We have perused the judgment of the Hon’ble Apex Court in the case of Solar Pesticides Pvt. Ltd. (supra) and we note that the issue that arose for consideration before the Apex Court was whether the doctrine of unjust enrichment is applicable in respect of raw material imported and consumed in the manufacture of a final product and the Hon’ble Apex Court has held that the principle of unjust enrichment incorporated in Section 27 of the Customs Act (corresponding Section 11B of the C.E. Act) would be applicable in respect of imported raw material and captively consumed in the manufacture of a final product and duty is considered to have been passed on when the duty paid on raw material has been added to the price of the finished goods and the Hon’ble Apex Court has not said anything about captive consumption of capital goods. We also note that the Apex Court in the noted judgment has distinguished their judgment in the case of Bhadrachalam Paperboards Ltd. v. Govt. of Andhra Pradesh (surpa). The learned JDR has invited our attention to the decision of the West Zonal Bench of the Tribunal in the case of CC (Import) v. Godrej & Boyce reported in 2001 (135) E.L.T. 878 wherein, in Para 7 it was held that the judgment of the Supreme Court in the case of U.O.I. v. Solar Pesticides (supra) makes it clear that the doctrine of unjust enrichment would apply to capital goods also. As noted above, the above noted judgment of the Hon’ble Apex Court in the cases of Solar Pesticides does not say anything about capital goods and it deals only with captive consumption of imported raw material.”
In the case of Golden Iron & Steel Forgings (supra) also, it was held that the ratio of the decision in Solar Pesticides (supra) was not applicable to a claim of refund of customs duty paid on imported capital goods. The observation made by the West Zonal Bench, in the case of Godrej & Boyce Mfg. Co. (supra), that “the judgment of the Supreme Court in Union of India v. Solar Pesticides Pvt. Ltd. – 2000 (116) E.L.T. 401 (S.C.) makes it clear that the doctrine of unjust enrichment would apply to capital goods also” is per incuriam. There is nothing in the Apex Court’s judgment (in Solar Pesticides) that could give rise to such a view, as correctly noted by the South Zonal Bench in Grasim Industries (supra).
5. In view of the above finding, it is held that the doctrine of unjust enrichment under Section 27 of the Customs Act is not applicable to the claim for refund of duty of customs paid on the capital goods in question. The appellants are entitled to receive cash refund of the duty. The jurisdictional Assistant Com missioner of Customs is directed to effect the refund within a period of three months from the date of receipt of a certified copy of this order. The impugned order is set aside and the appeal is allowed with the above direction.