2009 (3) TMI 854 - AT - Central Excise

Summary

Issues:
1. Appeal against rejection of refund claim by Commissioner (Appeals).
2. Application of the doctrine of unjust enrichment.
3. Refund of unspent amount in PLA account.

Analysis:
1. The appeal was filed by the Revenue against the rejection of a refund claim by the Commissioner (Appeals) in a case where the respondents were involved in diluting pesticides for marketing purposes. The Asst. Commissioner initially rejected the refund claim, citing excisability of the goods produced. However, the Hon'ble Delhi High Court and later the Supreme Court held that the dilution process did not amount to manufacture. Subsequently, the Commissioner (Appeals) allowed the refund claim of Rs. 6,55,000, which was paid under protest, to be re-credited in the respondents' PLA/Cenvat account. The respondents then sought a cash refund of the unspent amount, leading to the present appeal.

2. The Revenue argued that the doctrine of unjust enrichment should have been examined before allowing the refund claim. They contended that the amount should have been utilized at the time of clearance, and the respondents needed to prove that the duty incidence did not pass on to others. The Revenue also pointed out an earlier order where re-crediting was allowed instead of a refund, emphasizing the applicability of unjust enrichment in the current refund claim.

3. The respondents, on the other hand, maintained that the refund of the unspent PLA balance was not subject to unjust enrichment as it was already allowed by the original authority. They highlighted that the Commissioner (Appeals) had previously sanctioned the re-credit without any objections from the Revenue, making the order final. The respondents argued that since the amount was unspent in their PLA account, the principle of unjust enrichment did not apply, as per the proviso to Section 11B(2).

In conclusion, the Tribunal agreed with the Commissioner (Appeals) and rejected the Revenue's appeal. The Tribunal found that the refund claim for the unspent amount in the PLA account was not subject to unjust enrichment, as per the provisions of Section 11B(2). The decision was based on the previous order allowing re-credit and the absence of objections from the Revenue at that time, leading to the finality of the order.