2008 (7) TMI 790 - AT - Central Excise

Production capacity based duty - Annual capacity of production - Fixation of - Refund - Unjust enrichment

Summary

Issues:
1. Refund claim based on judgment of Hon'ble Apex Court regarding gallery portion not to be considered while fixing APC.
2. Rejection of refund appeal by Commissioner (Appeals) on grounds of Supreme Court judgment applicability, lack of appeal against APC fixation, and unjust enrichment.
3. Appellant's reliance on judgments of Mumbai High Court and Tribunal, payment of duty under protest, and application of unjust enrichment principle.
4. Arguments reiterated by the learned DR.
5. Eligibility for APC benefit based on Supreme Court judgment and consideration of unjust enrichment principle.
6. Commissioner (Appeals) observations on unjust enrichment and remand of the matter for establishing duty not recovered from customers.

Analysis:
1. The appellants, engaged in textile processing, filed a refund claim based on a Supreme Court judgment regarding the non-inclusion of the gallery portion while fixing Annual Production Capacity (APC). The Commissioner had fixed the APC including the gallery length, leading to the refund claim.
2. The Commissioner (Appeals) rejected the refund appeal citing reasons such as the Supreme Court judgment not directly applicable, absence of an appeal against APC fixation, and the bar of unjust enrichment. He noted that the duty burden passing on was not conclusively proven by the appellant.
3. The appellant made written submissions citing judgments supporting their eligibility for the benefit, including the Mumbai High Court and Tribunal decisions. They highlighted paying duty under protest and referenced cases to argue against unjust enrichment, emphasizing the duty payment method on invoices.
4. The learned DR reiterated the arguments of the lower authorities during the hearing.
5. The Tribunal considered the Mumbai High Court judgment and affirmed the appellant's eligibility for the APC benefit based on the Supreme Court ruling. The issue of unjust enrichment was deliberated, with reference to the principle and observations from the Panihati Rubber Ltd. case.
6. The Commissioner (Appeals) found the principle of unjust enrichment applicable due to the lack of conclusive proof regarding duty incidence passing on. However, as the appellant was not given an opportunity to establish non-recovery of duty from customers, the matter was remanded to the original adjudicating authority for further examination and clarification.