2008 (11) TMI 489 - AT - Central Excise

Refund - Unjust enrichment - Held that - The Tribunal in the case of Industrial Cables (I) Ltd. 2001 (12) TMI 104 - CEGAT, NEW DELHI held that in case the duty has been paid subsequent to the clearance of goods, the refund cannot be denied on the ground of unjust enrichment in absence of any evidence to show that actually the duty paid has been recovered from the customers - in case of penalty, the principles of unjust enrichments are not applicable - In the present case, the duty and penalty was paid subsequent to the clearance of goods and there is nothing in the accounts book of the appellant that the same has been recovered. Therefore, the impugned order is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund of duty and penalty rejection.
2. Burden of duty passing to customer.
3. Principles of unjust enrichment in refund cases.

Analysis:
1. The appellant filed an appeal against the rejection of a refund of Rs. 46,010/- and penalty of Rs. 5,000/- concerning old and used ball bearings cleared as scrap in 1997. The Adjudicating authority confirmed the duty demand and penalty in 2000, which the appellant paid in 2001 after the Commissioner (Appeals) set aside the demand. The refund claim was rejected on grounds of failing to prove non-passing of duty burden to the customer.

2. The Revenue contended that under the Central Excise Act, the burden of duty is passed and receivable, with the onus on the assessee to demonstrate non-passing. The appellant had accounted for duty incidence in their Profit and Loss Account without evidence of treating it as "Claim Receivable," leading to the Revenue's argument.

3. The Tribunal applied principles of unjust enrichment, citing the Supreme Court's ruling in Sahakari Khand Udyog Mandal v. Commr. of Central Excise & Customs. Despite the duty and penalty payment occurring over three years after goods clearance, the refund was granted as there was no evidence of duty recovery from customers. Notably, unjust enrichment principles do not apply to penalties. The absence of evidence in the appellant's accounts showing recovery led to setting aside the impugned order and allowing the appeal.