TANIR BAVI POWER COMPANY PVT. LTD. Vs. CC

JUDGEMENT

(1.) THE appellant Tanir Bavi power Company Pvt. Ltd., imported a Barge Mounted Power Plant and its accessories during the period December 2000 to February 2002. The import was registered as a project import and goods assessed to custom duty, including additional duty of customs, at the time of their clearance.

(2.) SUBSEQUENTLY , Finance Act 2002, under Section 130, granted retrospective exemption in respect of the whole of the additional duty of custom leviable during the period 8.12.2000 to 28.2.2002 in respect of Barge Mounted Power Plant. In terms of the said exemption the appellant claimed refund of the additional duty of customs (over Rs.93 crores) which had already been paid. The Assistant Commissioner of Customs sanctioned an amount of about Rs. 89 crores, thus, denying the refund of the remaining amount of over Rs. 4 crores. This was on the ground that the power project was commissioned on 8th June 2001 and between the date of commissioning the plant and the grant of refund, the appellant had passed on the duty payment equivalent to the said amount through the sale price of the electricity generated and sold to Karnataka Power Transmission Corporation Limited. The said amount was worked out by the Assistant Commissioner on the basis that the normal life of the power plant would be 30 years and the additional Customs duty is being passed through the fixed cost component of the price of electricity. The amount of refund denied was proportionate to the time period between commissioning of plant and grant of exemption.

(3.) WHILE the aforesaid appeals were pending before the Commissioner (Appeals), the aspect of unjust enrichment in regard to the refund claim was considered by parties concerned, including Department of Revenue. The appellant importer and M/s Karnataka power Transmission Corporation Limited entered into an agreement to pass on the benefit of the refund to power consumers through revision of "future tariff". The department of Revenue considered this arrangement sufficient satisfaction of the bar of unjust enrichment contained in Section 27 of the Customs Act and issued letter dated September 5, 2003 to the Chief Commissioner of Customs, Bangalore. We read that letter: -