Judgment:
1. In these two appeals arising out of a common order-in-Appeal filed by the Revenue and other filed by M/s. Korin India Ltd. - the issue involved is the availability of refund to M/s. Korin India Ltd. 2. Shri Naveen Mullick submitted that M/s. Korin India Ltd. (KIL in short) imported machinery for production of automotive rear axle/spares and filed Bill of Entry dated 17-8-96; that they were directed to clear the goods provisionally on furnishing of the security calculated at 5% of the value which they did; that subsequently, the enquiry against them was dropped by the Department and Bill of Entry was finally assessed on 14-8-1998, that they, therefore, filed the Refund claim for refund of Rs. 18,31,806/-deposited as security on 17-8-98; that the Assistant Commissioner, under Adjudication Order dated 26-10-1998 while sanctioning the amount of Rs. 18,31,806/- ordered the credit of the same in the Consumer Welfare Fund; that the Commissioner (Appeals) under Order dated 22-4-99 set aside the Adjudication Order by holding that the amount was a security deposit and in case of captive consumption doctrine of unjust enrichment is not applicable, that the Commissioner (Appeals) remanddd the case to the Adjudicating Au- thority to examine refund claim on the basis of balance sheet and other documents. The learned Advocate, further, submitted that the Assistant Commissioner again under Adjudication Order No. 164/99, dated 22-9-99 still order the amount of refund to be credited in the Consumer Welfare Fund on the ground that they had recovered the amount from their buyers by including the same in the costing of their final goods; that the Commissioner (Appeals) under the impugned order, held that only Rs. 11,04,579/- was admissible as refund to them out of Rs. 18,31,806/- and that remaining amount Rs. 7,27,227 /- could not be claimed as the same had been taken by the Appellants in the costing of the machinery and the incidence of which had been passed on to the buyers.
3. The learned Counsel now mentioned that they had deposited Rs. 18,31,806/- as security against clearance of the machinery on provisional basis; that Section 18 of the Customs Act empowers the Department to make assessment provisionally by directing the importer to furnish the security/surety; that on finalisation of assessment, such security amount is either adjusted against the final assessment or refunded to the importer; that as in the present matter, value declared by them had been accepted by the Department, the security amount is required to be refunded and it is not the duty under the Customs Act and, accordingly, the provisions of Section 27 of the Customs Act shall not apply to such refund of security. He relied upon the observation of the Apex Court in the case of Mafatlal Industries Ltd. v. U.O.I., -1997 (89) E.L.T 247 (S.C.) according to which refund of security was excluded from the principle of unjust enrichment. Reliance was also placed on the decision in the case of Oswal Agro Mills Ltd. v.Assistant Collector -1994 (70) E.L.T. 48 (S.C.) wherein it was held that the furnishing of a bank guarantee for all or part of the disputed excise duty is not equivalent to payment of the amount of excise duty; the bank guarantee is security for the Revenue and Section 11B of the Central Excise Act is not attracted. He also stated that in Somaiya Organics v. State of U.P. - 2001 (130) E.L.T. 3 (S.C.), the Apex Court again confirmed that "Furnishing of bank guarantee cannot that amount to making of payment as it was to avoid making payment of the vend fee that bank guarantees were issued." The learned Advocate, further, contended that even the Revenues appeal, it is not their ground about invoking of Section 27 of the Customs Act; that the Commissioner (Appeals) in the impugned order has held that the refund was only covered under Section 18(2) of the Customs Act; that in view of Supreme Court's decision and specific provisions of Section 18, the security amount cannot be considered as duty deposit. He relied upon the decision in Escorts Yamaha Motors Ltd. v. Commissioner of Customs, - 2000 (122) E.L.T. 883 (T) wherein it was held that the refunds arising from final assessment are not covered by the provision of Section 27 and bar of unjust enrichment shall not be applicable to such refunds.
Reliance was also placed on the following decisions :Kinetic Motors Co. Ltd. v. CCE - 2001 (136) E.L.T. 85 (T) = 2000 (40) RLT 450 (CEGAT) 4. The Id. Advocate, finally submitted that in view of these judicial pronouncements the manner in which the amount had been reflected in the balance sheet becomes totally irrelevant.
5. On the other hand, Shri Mewa Singh, learned SDK, submitted that the Bill of Entry was assessed to duty by adding 5%; that the importer had passed on the incidence of duty to their customers inasmuch as they had shown the amount incurred on the purchase of the machinery in question including the 5% loaded by the Department towards the amount of expenditure and they had also claimed depreciation on the same. He also submitted that no refund is thus available to the Importer; that the Commissioner (Appeals) has erred in allowing the refund of Rs. 11,04,579/- when it was established that the amount of duty deposit was taken into the costing of the machine and thus formed part of the expenditure of the Appellant; that it has been held in the impugned order that the incidence of duty had been passed on to the buyer in the light of the decision of the Supreme Court in the case of UOI v. Solar Pesticides Ltd. - 2000 (116) E.L.T. 401.
6. We have considered the submissions of both the sides. It is not in dispute that the assessment was provisional pending enquiry by the Special Valuation Branch of the Customs House with regard to valuation of the goods imported by the Respondents,. They were allowed to clear the imported goods on payment of 5% loading. Section 18 of the Customs Act provides for provisional assessment subject to the condition that the importer furnishes security as may be deemed fit by the proper officer. In the present matter, the Department had directed them to clear the goods after loading the duty by 5%. We find substance in the submissions of the learned Counsel that the amount extra paid by them was by way of surety only and it was not part of duty. The Nine Judges Bench of the Supreme Court in Mafatlal Industries Ltd. 1997 (89) E.L.T.247 (S.C.) has observed that "Any recoveries or refunds consequent upon the adjustment under Sub-rule (5) of Rule 9B will not be governed by Section 11A or Section 11B, as the case may be". This observation is applicable to Section 27 of the Customs Act also as the provisions of Section 18 of the Customs Act and Rule 9B of the Central Excise Rules are pari materin. The same views were expressed by the Appellate Tribunal in the case of Escorts Yamaha Motors Ltd. (Supra). In the said case also the components parts of motorcycle imported by the Appellants therein were assessed provisionally because of Special Valuation Branch loading, ranging between 1% to 5%. The valuation was decided by accepting the value declared by the Appellants. The Tribunal held, following the decision in the case of Kinetic Motor Co. Ltd. v. CCE, Indore - [2001 (136) E.L.T. 85 (T) = 2000 (40) RLT 450], that the provisions of unjust enrichment are not attracted in cases of finalisation of assessment. This decision applies on all fours to the facts of the present matter since the imported goods were cleared on provisional assessment by loading duty by 5% and the value as declared by the importers had been accepted by the Customs House. The Tribunal again in the case of Swaraj Mazda Ltd., supra, held that in terms of Sub-section (2) of Section 18 of the Act the Department is obliged to refund the amount to the Appellant on finalisation of the assessment.
The Tribunal also held that the observation of the Supreme Court in Mnfatlal Industries "apply on equal force to the refund of customs duty, as a result of provisional assessment." The ratio of the decision in U.O.I. v. Solar Pesticides Ltd. will not apply to the facts of the present matter as in that a case no provisional assessment was involved. Thus following the ratio of these decisions we hold that the importers are eligible to refund of entire amount involved in the matter. Accordingly we reject the appeal filed by the Revenue and allow the appeal filed by M/s. Korin India Ltd.