2011 (9) TMI 900 - HC - Central Excise

Denial of refund claim - Unjust enrichment - Held that - Payment of duty interest and penalty was in pursuance of an order passed by the adjudicating authority earlier. Once that order is set aside the refund is automatic. Merely because the adjudicating authority is yet to adjudicate the exigibility of tax is no ground to refuse refund. When once the Appellate Commissioner on consideration of the material on record has held that there is no unjust enrichment and therefore the assessee is entitled to get back duty interest penalty paid in pursuance of an earlier order by the adjudicating authority which is now set aside the said order is legal and the Tribunal was justified in upholding the said order - Decided against Revenue.

Summary

Issues:
1. Challenge to Tribunal's order upholding refund.
2. Disallowance of refund claim based on unjust enrichment.
3. Contention regarding refund before adjudication by the authority.

Analysis:
1. The appeal by the Revenue challenges the Tribunal's decision upholding the refund order. The Tribunal had dismissed the revenue's appeal and upheld the order of refund sought by the assessee. The assessee had initially filed for a refund following the Tribunal's decision that they were not liable to pay duty, which was later disallowed by the adjudicating authority on grounds of unjust enrichment. The Appellate Commissioner, upon the assessee's challenge, allowed the appeal and directed the refund, leading to the current appeal before the Tribunal.

2. The Apex Court set aside the CESTAT's decision that the assessee was not liable to pay duty, remanding the matter back to the adjudicating authority for further consideration. The Revenue argued that the refund should not have been granted until the adjudicating authority made a final decision on the matter. However, the Court rejected this argument, stating that once the original order to pay duty was set aside, the refund becomes automatic. The Appellate Commissioner's determination that there was no unjust enrichment and that the assessee was entitled to a refund was considered valid. Therefore, the Tribunal's decision to uphold the refund order was deemed justified, dismissing the Revenue's appeal.

3. The Court emphasized that the mere fact that the adjudicating authority had not yet made a final decision on the tax liability did not justify withholding the refund. The Appellate Commissioner's decision, based on a review of the evidence, supported the refund claim. As a result, the Tribunal's decision to uphold the refund order was upheld, and the appeal by the Revenue was dismissed.