2009 (10) TMI 779 - AT - Central Excise

Summary

Issues:
1. Refund claims rejection by the original adjudicating authority.
2. Tribunal's order allowing refund claims.
3. Appeal against rejection of the second claim.
4. Unjust enrichment and misdeclaration issues.

Issue 1: Refund claims rejection by the original adjudicating authority
The appellants, engaged in manufacturing dutiable processed fabrics, took input credit without duty payment under a scheme of deemed credit. They made export and sought a refund of accumulated credit under Rule 57F. Two refund claims were made, both rejected by the original adjudicating authority. The Tribunal, through Order No. 471-472/04-NB(C), allowed both appeals. However, the original adjudicating authority failed to sanction full refund as directed by the Tribunal, leading to the rejection of the second claim of Rs. 3,74,791/-.

Issue 2: Tribunal's order allowing refund claims
The Tribunal allowed the appeals based on the Notification No. 29/96-C.E., which permitted credit of declared duty on inputs used in final products cleared for export under bond. The Tribunal observed that the procedural lapses mentioned by the Assistant Commissioner did not warrant denial of the refund under Rule 57F. The Commissioner (Appeals) upheld this view, emphasizing that the appellants' inability to utilize the credit towards home clearances due to the introduction of the Compounded Levy Scheme supported the refund. The Tribunal's decision was based on the fact that the inputs for which credit was taken were used in goods exported under bond, justifying the refund.

Issue 3: Appeal against rejection of the second claim
The appellant's advocate argued that the matter had attained finality post the Tribunal's order, criticizing the lower authorities for rejecting the refund claim. The Revenue contended that the appellants falsely declared exporting goods under bond and had already received rebate money, leading to unjust enrichment if a refund was granted. The SDR highlighted that the Tribunal's decision was based on incorrect information provided by the appellants, discovered post-order issuance.

Issue 4: Unjust enrichment and misdeclaration issues
The Commissioner (Appeals) noted that the goods were exported under claim of rebate, not under bond as declared by the appellants before the Tribunal. Failure to produce evidence supporting export under bond led to the rejection of the refund claim. The rejection was justified to prevent unjust enrichment and benefitting from misdeclarations. Granting a refund would have rewarded the appellants for incorrect information provided to the Tribunal, constituting a violation of judicial discipline.

In conclusion, the rejection of the refund claim by the lower authorities was upheld due to misdeclarations, potential unjust enrichment, and the absence of evidence supporting export under bond. The Tribunal's decision to allow the refund was based on the incorrect information provided by the appellants, rendering the basis for the refund invalid. The judgment emphasizes the importance of accurate declarations and the prevention of unjust enrichment in tax matters.