2013 (1) TMI 813 - HC - Central Excise

Summary

Issues Involved:
The appeal by the Revenue under Section 35G of the Central Excise Act, 1944 against the order dated 4-3-2008 passed by the Customs, Excise & Service Tax Appellate Tribunal, Principal Bench, New Delhi in Appeal No. 1201/2006-SM, regarding the claim for refund and the concept of unjust enrichment.

Summary of Judgment:

Issue 1: Claim for Refund and Unjust Enrichment
The respondent-assessee, engaged in the manufacture of wool worsted and polyester blended yarn, was directed by the Assistant Commissioner to deposit the remaining amount of duty short paid and file a separate refund claim for the excess duty paid in relation to yarns transferred for captive consumption. The Appellate Authority directed the adjustment of the duty recoverable against the excess payment made by the assessee, leading to the refund of the short paid amount. The Tribunal upheld the refund, stating that the doctrine of unjust enrichment does not apply to provisional assessments. The Commissioner (Appeals) rejected the Revenue's appeal, emphasizing that the bar of unjust enrichment does not apply to pre-deposits. The Tribunal further held that deposits made during the pendency of an appeal become refundable upon success, and unjust enrichment provisions are not attracted.

Issue 2: Application of Unjust Enrichment
The Revenue contended that there was no provision for adjusting excess paid duty under Rule 7 of the Central Excise Rules, 2002, and refund eligibility required proof that the incidence was not passed on. However, the Tribunal found no error in the refund order, as the amount was deposited in compliance with the Appellate Authority's order. The Tribunal affirmed the orders of the Appellate Commissioner and Dy. Commissioner, stating that the principles of unjust enrichment did not apply to the deposited amount.

Conclusion:
The Tribunal upheld the refund of the short paid duty amount, rejecting the Revenue's appeal based on the concept of unjust enrichment. The Tribunal found no error in the orders passed by the Dy. Commissioner and Appellate Authority, affirming that the deposited amount was refundable and unjust enrichment principles did not apply. Consequently, the appeal was dismissed in favor of the assessee.