2014 (3) TMI 970 - AT - Central Excise

Denial of refund claim - Unjust enrichment - Small Scale Exemption Notification No. 8/2002-C.E., dated 1-3-2002 - appellants were using the brand name of another person - Held that - appellants pre-deposited the amount after confirmation of demand against them and on success of the same, they are entitled to the refund of such pre-deposit. It is not the Revenue s case that there was any infirmity in the sanction of the refund claim by the original Adjudicating Authority. The only ground is that the same was not pre-audited. In the absence of any dispute about the availability of the refund claim, I find that this procedural aspect prescribed by the Board Circular, which is in any case, is not requirement of law cannot act as prejudice to the appellants interest. - Decided in faovur of assessee.

Summary

Issues:
1. Dispute regarding Small Scale Exemption Notification
2. Refund of duty deposited by the appellants
3. Challenge by Revenue on refund sanctioning
4. Pre-audit requirement for refund claims

Analysis:

1. The appellants were involved in manufacturing detergent soap and powder, leading to a dispute over Small Scale Exemption Notification. This dispute resulted in a Show Cause Notice and subsequent duty determination against the appellants. Despite initial decisions against them, the Commissioner (Appeals) eventually ruled in favor of the appellants.

2. Following the favorable decision, the appellants sought a refund of the duty they had deposited, along with additional duty paid during the clearance of goods. The Adjudicating Authority allowed a partial refund of the deposited amount but credited the balance to the consumer welfare fund. The Revenue objected to this decision and challenged it before the Commissioner (Appeals).

3. The Commissioner (Appeals) reversed the original refund order based on the lack of pre-audit, citing a Board Circular. However, the Tribunal highlighted a previous judgment by the Hon'ble High Court of Bombay, emphasizing that refund proceedings are quasi-judicial and pre-audit could interfere in such proceedings. The Tribunal noted that the absence of pre-audit should not prejudice the appellants' entitlement to the refund.

4. The Tribunal found no dispute regarding the appellants' entitlement to the refund, as the original Adjudicating Authority had sanctioned it without any noted issues. The only contention raised was the lack of pre-audit, which the Tribunal deemed as a procedural requirement not mandated by law. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellants, providing them with consequential relief.