2015 (9) TMI 1569 - AT - Central Excise

Refund claim - unjust enrichment - amount credited to Consumer Welfare Fund in terms of Section 11B(2) of the Central Excise Act, observing therein that on the basis of C.A. certificate, it has been certified that the appellant have received the amount from M/s Indofil - Held that - the language of the C.A. certificate is erroneous in view of the audited balance-sheets & records examined in the course of hearing - the appellant have shown more than the amount recovered from M/s Indofil under the head expenses received on 31.03.2004 which has been carried forward year to year, which is evident from the balance-sheet of 31.03.2013. In this view of the matter, no unjust enrichment is applicable on claim of refund in dispute - adjudicating authority is directed to grant refund within a period of 45 days - appeal allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against rejection of refund claim based on unjust enrichment.
- Interpretation of C.A. certificate and its impact on the case.
- Application of Section 11B(2)(C) in the context of refund of CENVAT Credit.

Analysis:
1. Appeal Against Rejection of Refund Claim:
The appellant, engaged in job-work for another company, had availed CENVAT Credit and later reversed it upon mistakenly believing the other company had claimed drawback of Central Excise Duty. The refund claim was rejected based on the doctrine of unjust enrichment. The Commissioner (Appeals) upheld the rejection citing the recovery of the amount from the other company. However, the appellant argued that they did not receive any amount in cash or by cheque from the other company, as evidenced by their books of account and ledger entries. The Tribunal found that the appellant had consistently shown receivables from the other company in their balance sheets, indicating no unjust enrichment. Consequently, the appeal was allowed, directing the refund with interest and requiring an indemnity bond certifying no receipt of the disputed amount.

2. Interpretation of C.A. Certificate:
The lower authorities relied on a Chartered Accountant certificate stating that the other company had reimbursed the reversed CENVAT Credit amounts. However, the Tribunal found discrepancies between the certificate and the audited balance sheets and records. The appellant's ledger entries and balance sheets demonstrated no actual receipt of the disputed amount, contradicting the C.A. certificate's implications. This discrepancy led the Tribunal to conclude that the unjust enrichment doctrine did not apply, ultimately allowing the appeal and ordering the refund.

3. Application of Section 11B(2)(C):
The appellant's counsel argued that the provisions of Section 11B(2)(C) did not attract unjust enrichment in the case of refunding CENVAT Credit on inputs. The Tribunal did not explicitly address this argument in its analysis but focused on the lack of actual receipt of the disputed amount by the appellant from the other company. This factual discrepancy, along with the consistent representation of receivables in the appellant's financial records, formed the basis for the Tribunal's decision to allow the appeal and grant the refund without invoking unjust enrichment principles.

In conclusion, the Tribunal's detailed analysis of the appellant's financial records, the C.A. certificate, and the application of unjust enrichment principles resulted in the allowance of the appeal and the direction for refund with interest, subject to the appellant providing an indemnity bond confirming the non-receipt of the disputed amount from the other company.