2007 (3) TMI 509 - AT - Central Excise

Summary

Issues involved:
The issues involved in this case include the sanction of refund involving indirect unjust enrichment, validity of recovery without a Show Cause Notice u/s 11A, distinction between duty payment and adjustment, and the applicability of case laws and circulars in determining unjust enrichment.

Sanction of Refund Involving Unjust Enrichment:
The appeal was filed against the order remanding the original order of the Deputy Commissioner to examine if the refund involved unjust enrichment. The refund amount of Rs. 1,59,00,000/- comprised various payments made by the appellant, including amounts paid during investigations and as pre-deposit for hearing their appeal. The appellant argued that the refund did not involve unjust enrichment based on case law and the timing of payments.

Validity of Recovery Without Show Cause Notice u/s 11A:
The appellant contended that the recovery was ordered without issuing a Show Cause Notice u/s 11A, which is required to demand a refund incorrectly made. Various judicial authorities and a Circular of CBEC were cited to support this argument. The appellant also admitted the liability of Rs. 18,74,461/-.

Distinction Between Duty Payment and Adjustment:
The Tribunal considered the case law and found that the refund of deposit amounts made during investigations did not involve unjust enrichment. The appellant provided a Chartered Accountant's certificate stating that the refund claimed had not been passed on to customers. The Tribunal noted that the lower appellate authority found unjust enrichment without sufficient evidence.

Applicability of Case Laws and Circulars:
The Tribunal referred to various case laws and a Circular of CBEC to determine that amounts erroneously refunded cannot be recovered without a valid demand notice u/s 11A. The Circular clarified the procedure for recovery of erroneous refunds and emphasized the importance of timely demands under Section 11A. The Tribunal held that the Circular is binding on departmental authorities and ordered the refund of Rs. 1,59,00,000/- provided the admitted liability of Rs. 18,74,461/- is discharged.