2008 (5) TMI 487 - AT - Central Excise

Summary

Issues involved: Refund of duty deposited during investigation period, appeal allowed on limitation but not on merits, consequential relief, unjust enrichment.

Summary:

Refund of duty deposited during investigation period:
The appellants, engaged in manufacturing plastic goods, deposited an amount from their Modvat account in relation to goods alleged to be cleared without payment of duty. The Jt. Commissioner confirmed the demand and imposed a penalty. The Commissioner (Appeals) later set aside the order of the Adjudicating Authority, allowing the appeal on the ground of limitation. This entitled the appellant to a refund of the duties deposited during the investigation.

Appeal allowed on limitation but not on merits:
The Commissioner (Appeals) rejected the refund claim, stating that the duty amount deposited cannot be refunded as the appeal was allowed on limitation and not on the merits of the case. However, the Tribunal found this reasoning to be flawed. Despite the appeal being allowed on limitation, the appellants were still entitled to the refund as the earlier order was set aside in its totality.

Consequential relief:
The Commissioner (Appeals) had observed that consequential relief, if admissible in law, should be granted. The Tribunal emphasized that the expression "which may be admissible in law otherwise" should not be interpreted to deny consequential relief on the merits of the case. The departmental officers erred in rejecting the refund claim based on the appeal not being disposed of on merits.

Unjust enrichment:
The rejection of the refund claim by the Asst. Commissioner on the grounds of time bar and unjust enrichment was not upheld by the Tribunal. The Tribunal set aside the impugned order and allowed the appeal, granting consequential relief to the appellant.