1992 (7) TMI 256 - AT - Central Excise

Summary

Issues:
Appeal against rejection of refund claim based on unjust enrichment.

Analysis:
The appeal arose from the rejection of a refund claim by the Collector of Central Excise (Appeals) concerning exemptions for specified goods produced by small-scale units. The appellants challenged the rejection on the grounds of unjust enrichment. The Collector (Appeals) accepted the appellants' claim that their claim was not time-barred and that purchasing concentrates from another entity did not make them manufacturers on behalf of that entity. However, the Collector (Appeals) agreed with the original rejection, stating that since the appellants had not passed on the benefit of exemption to customers, they should not be allowed to unjustly enrich themselves by obtaining a refund. The main contention was whether a refund could be denied on the basis of unjust enrichment.

The appellants argued that statutory authorities are bound by the provisions of the law and that the concept of unjust enrichment should not be applied to their case. They relied on previous decisions of the Tribunal and High Courts to support their position. The counsel also highlighted that the amendment to Section 11B in 1991 should not apply to refund claims filed in 1981, as those claims had already been adjudicated upon. Additionally, the counsel referred to a Calcutta High Court decision regarding the timing of the application of the unjust enrichment bar.

The Departmental Representative contended that manufacturers who had not passed on the benefit of exemption to customers should not be allowed to enrich themselves by claiming refunds. He pointed out that even refund claims filed before the amendment to Section 11B could be covered by the amended section. However, he acknowledged that the cited case law related to decisions made by High Courts in writ jurisdiction and might not directly apply to Departmental authorities.

Upon consideration of the arguments, the Tribunal noted that previous decisions had held that Departmental authorities could not reject refund claims based on unjust enrichment if such conditions were not explicitly stated in the relevant section. The Tribunal cited previous cases to support this position. It was emphasized that the doctrine of unjust enrichment could only be invoked by Courts and not by authorities under the Act. As the refund claim in question was filed and disposed of in 1981, prior to the amendment to Section 11B, the Tribunal ruled in favor of the appellants. The Tribunal also noted that the implications of the amended Section 11B were not directly relevant to the current case and should be considered in future proceedings. Consequently, the appeal was allowed.