2009 (4) TMI 615 - AT - Central Excise

Demand - Inputs removed as such - Quantum of payment - Refund - Unjust enrichment - whether the respondents were required to pay, any amount in excess of what had been availed on receipt of inputs, at the time of their removal as such? - whether refund of excess amount paid by the respondents would involve their unjust enrichment?

Summary

Issues:
1. Whether the respondents are entitled to a refund of excess duty paid on inputs during specific periods.
2. Whether the grant of refund would lead to unjust enrichment of the respondents.

Analysis:

Issue 1:
The case involved M/s. Caterpillar India Ltd. claiming a refund of excess duty paid on inputs cleared during certain periods. The original authority sanctioned a refund for a specific period but rejected the remaining claims, citing no excess payment. The Commissioner (Appeals) found the refund claim for one period admissible without unjust enrichment. The Revenue challenged this decision in Appeal No. E/106/04, while the respondents contended that all claims were eligible for refund without unjust enrichment. The dispute centered on the duty payable by the assessee upon removal of inputs on which Cenvat credit was taken during the material period.

The relevant statutory provisions, including Rule 57AB(1)(b) of Central Excise Rules (CER) and Rule 3(4) of Cenvat Credit Rules (CCR), governed the duty payment on input removals. The Revenue argued that the respondents paid the appropriate duty on the removals as per the law and that the refund claim was rightly rejected. Circular No. 816/93/2005 clarified the duty payment requirements pre-1-2-03. The respondents, supported by case law and Circular No. 813/10/05, asserted their entitlement to the refund amounts.

The Tribunal referenced the Eicher Tractors case, establishing that the manufacturer had to pay an amount equal to the credit availed on inputs or capital goods upon their removal as such during the relevant period. This position was maintained under Rule 3(5) of CCR, 2004. Considering the CBEC's clarifications and the Tribunal's decision, the respondents were deemed eligible for the refund of excess amounts paid, subject to unjust enrichment scrutiny. The Tribunal disagreed with the Commissioner (Appeals) on the unjust enrichment aspect and ordered all claims to be allowed after reevaluation for unjust enrichment.

Issue 2:
The second issue revolved around whether the grant of refund to the respondents would result in unjust enrichment. The respondents argued against unjust enrichment, presenting a Chartered Accountant's certificate to support their claim that the amounts claimed were not transferred to consumers. The Tribunal, after considering the relevant legal provisions and precedents, determined that the respondents were entitled to the refund amounts subject to a reassessment for unjust enrichment. The Revenue's contention that the Chartered Accountant's certificate was insufficient was upheld, and the Commissioner (Appeals)'s decision on the absence of unjust enrichment was overturned.

In conclusion, the Tribunal directed the original authority to allow all claims after reexamining them from the unjust enrichment perspective. The appeal by the Revenue and the cross-objections by the respondents were disposed of through remand, emphasizing that the respondents must be given a hearing before the final decision on the issue.

This detailed analysis of the legal judgment provides a comprehensive overview of the issues involved, the arguments presented by both parties, the relevant legal provisions, and the Tribunal's decision on each issue.