2017 (1) TMI 1540 - AT - Central Excise

Ad-hoc exemption orders - Order Nos. 121/12/2005-CX and 122/13/2005-CX, both dated 8-8-2005 - goods cleared was meant for supply to the Tsunami victims without being cleared for sale - Held that - appellant had cleared the goods to Tsunami victims prior to 8-8-2005 i.e. before receipt of the above ad hoc exemption orders, on payment of duty. Appellant having been held to be instrumentality of the State is not expected to be enriched at the cost of the citizens - the refund claim to the extent not paid is allowable to the appellant - appeal allowed.

Summary

Issues:
1. Refund claim based on ad hoc exemption orders for goods supplied to Tsunami victims.
2. Just enrichment and refund denial by the department.
3. Interpretation of the High Court judgment regarding unjust enrichment.
4. Revenue's contention on duty payment and refundability.
5. Appellant's status as an instrumentality of the State affecting refund eligibility.

Analysis:
1. The appellant sought a refund of &8377;16,68,697 based on ad hoc exemption orders issued by the Government of India for supplying goods to Tsunami victims. The appellant argued that no duty was payable due to the exemption granted, allowing procurement of raw material from SAIL for the victims' goods.

2. The department had collected duty from the appellant for the supply to Tsunami victims, rejecting the refund claim citing unjust enrichment. The appellant referenced a High Court judgment stating that as a Public Sector Undertaking controlled, funded, and monitored by the State, unjust enrichment did not apply.

3. The High Court judgment emphasized the appellant's state control, funding, and monitoring, concluding that unjust enrichment was not applicable. The judgment highlighted that the appellant, being an instrumentality of the State, should not unjustly enrich itself at the citizens' expense, aligning with Supreme Court principles.

4. The Revenue contended that duty payment by the assessee was non-refundable, opposing the appellant's refund claim. However, the Tribunal considered the appellant's status and the exemption orders, emphasizing that the State should not benefit at the citizens' cost, as per legal precedents.

5. Considering the appellant's status as an instrumentality of the State and the exemption orders, the Tribunal allowed the refund claim to the extent not previously paid. The decision aimed to prevent unjust enrichment by the State at the expense of citizens, aligning with legal principles and the intention behind the exemption orders. The Tribunal clarified that only the balance of the refund claim, not previously paid, would be granted to the appellant.