2004 (5) TMI 483 - AT - Central Excise

Summary

Issues:
Applicability of principle of unjust enrichment to refund claim.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved the issue of the applicability of the principle of unjust enrichment to a refund claim. The appellants contended that unjust enrichment did not apply to their refund claims as they related to rejected inputs sent back to the supplier. They argued that they were entitled to the refund amount and sought to set aside the impugned order passed by the Commissioner (Appeals).

The appellants, engaged in the manufacture of motor vehicles, had filed two refund claims totaling Rs. 43,383 for allegedly paying excise duty in excess. They received inputs from suppliers under duty-paid invoices but returned the goods paying a higher duty rate than required. The Tribunal noted that the appellants themselves acknowledged paying excess duty when returning the rejected goods to the suppliers. Consequently, the provisions of Section 12B were deemed applicable to the appellants' case. The appellants were obligated to demonstrate that they did not pass on the duty incidence to the buyers, which they failed to do. As a result, the refund amount claimed by them was credited to the Consumer Welfare Fund based on the doctrine of unjust enrichment.

After hearing arguments from both parties, the Tribunal upheld the impugned order, finding no illegality in it. The Tribunal dismissed the appeal of the appellants, affirming the decision to credit the refund amount to the Consumer Welfare Fund due to the doctrine of unjust enrichment being applicable in this case.