2008 (10) TMI 365 - AT - Central Excise

Penalty - appellant took credit of the amount in question by making entry in PLA - According to the appellant, as a consequence of setting aside the order, it became entitled to refund of the amount which had been paid under protest - Held that - refund cannot be allowed on any ground muchless taken suo motu by way of credit by the party - the Commissioner (Appeals) has already reduced to Rs. 5,000/- which in the facts and circumstances of the case appears to be reasonable and therefore, the quantum of penalty does not require any further modification - Appeal is dismissed

Summary

Issues:
Appeal against recovery order under Central Excise Act - Credit entry in PLA based on set-aside order - Refund claim - Doctrine of 'unjust enrichment' - Penalty reduction appeal.

Analysis:
The appeal challenged the recovery order under the Central Excise Act, which directed the appellant to pay a sum of Rs. 22,221 with interest and imposed a penalty equal to the amount. The appellant claimed credit based on an order setting aside the original order, arguing entitlement to a refund of the amount paid under protest. However, the appellant did not appear during the hearing but requested a decision on merit in their absence.

The Jt. CDR contended that the issue was settled in a recent Tribunal decision and cited the case of M/s. BDH Industries Ltd. v. C.C.E. (Appeals), Mumbai-I. The Tribunal, after reviewing the cited case law, upheld the Jt. CDR's submission. The Larger Bench's ruling emphasized that all refund claims must adhere to the Central Excise Act and related Rules. It highlighted the doctrine of 'unjust enrichment,' stating that refunds cannot be granted if the duty incidence has been passed on to consumers. Therefore, the appellant could not unilaterally claim credit for excess duty paid without ensuring non-passing of the duty incidence.

Regarding the penalty, the Commissioner (Appeals) had already reduced it to Rs. 5,000, which was deemed reasonable given the circumstances. Consequently, the Tribunal found no grounds to interfere with the decisions of the lower authorities and dismissed the appeal. The penalty amount was considered appropriate, and no further modifications were deemed necessary. The judgment was dictated and pronounced in open court, concluding the matter.