2006 (1) TMI 402 - AT - Central Excise

Summary

Issues: Dispute over availability of Notification No. 223/88 dated 20-6-1988 leading to deposit of duty, denial of refund on grounds of unjust enrichment, applicability of unjust enrichment to pre-deposits made after goods clearance.

Analysis:
The appellant had deposited a differential duty amount during the pendency of their appeal before the Commissioner of Central Excise (Appeals) due to a dispute with the Revenue regarding the availability of Notification No. 223/88. Upon the Tribunal allowing their appeal against the adverse orders of the Commissioner of Central Excise (Appeals), the appellant became eligible for a refund of the deposited duty. However, the Revenue initiated proceedings to deny the refund citing unjust enrichment as the reason. The appellant argued that since the duty was paid during the appeal and the certificates issued by the Revenue under Rule 57E were not utilized by their customers, the refund should not be rejected on the grounds of unjust enrichment. Despite this argument, the authorities below rejected the appeal.

During the hearing, the appellant contended that the bar of unjust enrichment should not apply to pre-deposits made after the clearance of goods. They cited various case laws to support their argument. Furthermore, they emphasized that the certificates for differential duty issued under Rule 57E were not utilized by their customers, as confirmed by the order of the Commissioner of Central Excise (Appeals).

After considering the submissions from both parties, the Tribunal found that out of the 14 certificates issued under Rule 57E, it was reported that no Modvat credit had been availed for 9 certificates. For the remaining five certificates, the customers had confirmed in writing that they did not avail Modvat credit as they were not under the Central Excise net. Based on this information, it was evident that the appellant's customers had not utilized the duty credit as per the Rule 57E certificates. Given the success of the appellant's appeal on the primary issue of the availability of Notification No. 223/88, the Tribunal concluded that the refund of the pre-deposit should not be withheld on the grounds of unjust enrichment. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief granted to the appellant.