M/s ONGC Ltd. v.

Commissioner of Customs, Mumbai

In front of CESTAT, Mumbai
Facts of the Case:
The present case arises out of two appeals filed against an order-in-appeal against rejection of
refund of claim. The appellants (ONGC) filed a refund claim for amounts involving Rs. 7
Lakh and Rs. 15 Thousand respectively for excess duty paid by them. This was claimed on
basis of trade discount of 5% on invoice value. The duty was paid on the value assessed
without taking into consideration the discount.
The Assistant Commissioner of Customs, admitted the claims on merit and later on, rejected
them on the grounds of unjust enrichment. The amount was credited to Consumer Welfare
Fund.
Issue:
Whether the bar of unjust enrichment would be applicable in the present case or not?
Arguments on behalf of the Appellants (ONGC):
The bar of unjust enrichment would not be applicable to the appellants as they are a
Public Sector Undertaking.
Reliance was placed on the case of Commissioner of Central Excise, Bangalore-II v.
Karnataka State Agro Corn Products Limited
1
in which KSACPL was an
undertaking owned by the State Government, which manufactured and supplied food
products to various departments of State Government. At time of clearance of goods,
Excise duty was paid to the Central Government. It was held by the Karnataka High
Court that, the doctrine of unjust enrichment is inapplicable to state undertakings,
unless it shown that such undertakings are totally different from all angles to the state.
In the instant case, price is fixed by the Government and the appellants have no
control and the bar of unjust enrichment should not apply to cases where the price is
fixed by the Government.

1
2006 (202) ELT 47 (Kar)
Reliance was placed on cases of Supreme Court - State of Rajasthan & Ors. Vs.
Hindustan Copper Ltd.
2
SAIL Vs. Commissioner of Customs (Port), Kolkata
3
and
others.
It was submitted that at the time of filing refund claim, the burden of duty was not
passed on to any other person, therefore the claim is not hit by the unjust enrichment;
in support of which a Chartered Accountants certificate was produced.
Arguments on behalf of the Respondent:
The refund claims on which appeal has been filed relate to capital goods to which
the appellants agree. Bar of unjust enrichment is applicable for refund of duty on
capital goods or any captive consumption. Therefore, the contention that bar of unjust
enrichment is not applicable to PSU is not correct.
Reliance was placed on the case of ONCG
4
in which the same was held by the
Tribunal; which was later confirmed by the Supreme Court.
Regarding the price fixation by the Government and no effective control over it by the
appellants uniformity of price should not be any ground for non-applicability of
unjust enrichment.
Reliance was place on the case of Philips Electronics India Ltd v. Commissioner of
Central Excise, Pune
5
in which the same was held.
Regarding the certificate issued by the Chartered Accountant, it is submitted that the
appellants did not file these before the Assistant Commissioner nor the Commissioner
(Appeals) and it is too late to produce at appellate stage.
Decision:
It was held by the Tribunal that the goods are capital goods and in view of decision of the
Supreme Court in the ONGC
6
case, the bar of unjust enrichment is applicable to the present
refund claims.

2
1999 (81) ECR 175 (SC)
3
2008 (230) ELT 647 (Tri-Kol)
4
2003 (156) ELT 794 (Tri-Del)
5
2010 (257) ELT 257 (Tri-Mum)
6
Supra n. 4