2007 (11) TMI 500 - AT - Central Excise

Summary

Issues Involved:
The appeal involves the question of unjust enrichment concerning the refund claim of duty paid on physician samples manufactured by the appellant, both on their own and as a job worker basis. The adjudicating authority rejected the refund claim on the grounds of unjust enrichment, leading to this appeal.

Physician Samples Manufactured by Appellant:
The appellant cleared physician samples manufactured by them on their own, as well as those manufactured on a loan license basis, on payment of duty. The valuation of physician samples was disputed, but the appellant's claim was resolved in their favor. The refund claim of Rs. 5,29,687/- for duty paid on physician samples was sought to be rejected due to the doctrine of unjust enrichment. The authorities held that the appellant had recovered the duty paid on physician samples from their principal, leading to the rejection of the refund claim. However, the appellant argued that the duty payment for physician samples manufactured by them should not be considered unjust enrichment as the duty liability rested with the principal manufacturer. The Tribunal found in favor of the appellant, stating that the refund claim for duty paid on physician samples of their own product should be granted as the duty was paid in excess due to incorrect valuation, and the doctrine of unjust enrichment did not apply in cases of free distribution of physician samples.

Physician Samples Cleared as Job Worker:
Regarding the refund claim of Rs. 3,82,745/- for duty paid on physician samples cleared by the appellant as a job worker, it was found that the appellant had claimed and received the duty amount from the principal manufacturer. As the principal manufacturer had not filed a refund claim, the appellant's claim for refund of excess duty paid did not stand. The Tribunal upheld the rejection of the refund claim for duty paid on physician samples cleared as a loan licensee.

Penalty Imposition:
The adjudicating authority imposed a penalty on the appellant for claiming an erroneous refund. However, the Tribunal noted that the refund claim was sanctioned based on higher judicial forum findings and not due to mala fide intentions. Therefore, the penalty was set aside as there was no contumacious behavior or total disregard of the law by the appellant.

In conclusion, the Tribunal modified the impugned order, allowing the appeal in part by granting the refund claim for duty paid on physician samples manufactured by the appellant but upholding the rejection of the refund claim for duty paid on physician samples cleared as a job worker. The penalty imposed on the appellant for the erroneous refund claim was also set aside.