2010 (8) TMI 536 - HC - Central Excise

Refund - Unjust enrichment - Rule 173L of Central Excise Rules 1944 - it is for the assessee to prove its claim for refund the incidence of the payment of excise duty has not been passed on to the consignees concerned - In the present case on hand the assessee on facts has established with relevant materials such as Form D-3 declaration credit notes weigh bill of the transporter gate pass debit notes and the letter for rejection of goods issued by the consignees that the goods have been returned by way of rejection and the return of the goods was also verified by the authorities - A question of unjust enrichment would arise only based upon a finding that the assessee is making a false claim for the refund of excise duty in a case it has been paid by the consignee concerned - It is not the case where the assessee has suppressed any material fact and obtained the refund - Refund allowed. regarding the period of limitation for making the application for refund is concerned - Held that the said contention has not been raised either in the earlier occasion or in the present proceedings - Appeal is dismissed

Issues Involved:
1. Whether the Tribunal is right in holding that there is no "unjust enrichment" when the first respondent had issued credit notes reimbursing the duty burden to the buyer, collected at the time of clearance of goods?
2. Whether the Tribunal is right in holding that the doctrine of "unjust enrichment" is not applicable since the refund is filed under Rule 173L of Central Excise Rules, 1944, and whether the provisions of refund under Section 11B of the Central Excise Act are not applicable to this case?

Detailed Analysis:

Issue 1: Unjust Enrichment and Credit Notes
The Revenue challenged the Tribunal's decision that there was no "unjust enrichment" because the respondent/assessee had issued credit notes reimbursing the duty burden to the buyer. The respondent/assessee argued that since there was no sale, the question of unjust enrichment does not arise. They provided sufficient proof, such as credit notes, D-3 declarations, gate passes, debit notes, and transporter's weigh bills, to show that the incidence of duty was not passed on to the consignees. The Tribunal upheld this view, noting that the Revenue did not provide any contrary evidence to dispute these facts. The Tribunal confirmed that the respondent/assessee had satisfactorily proved that the duty burden was not passed on to the buyers.

Issue 2: Applicability of Section 11B and Rule 173L
The Tribunal held that the doctrine of "unjust enrichment" was not applicable because the refund was filed under Rule 173L of the Central Excise Rules, 1944, and not under Section 11B of the Central Excise Act. The respondent/assessee argued that Section 11B did not apply as there was no sale between the assessee and the consignees, and the goods were returned due to non-compliance with required specifications. The Tribunal agreed, stating that Rule 173L was applicable and that the assessee had complied with the necessary procedures. The Tribunal also noted that the issue of unjust enrichment was raised for the first time in the appeals and thus could not be considered.

Additional Findings:
- The Commissioner (Appeals) and the Tribunal both found that the respondent/assessee had complied with Rule 173L and was entitled to the refund.
- The Tribunal had earlier directed the quantum of refund to be determined by the jurisdictional Assistant Commissioner, who instead issued a show cause notice to cancel the refund on the grounds of unjust enrichment.
- The Tribunal dismissed the Revenue's appeals, stating that the only issue was to determine the quantum of refund as per Rule 173L.
- The Tribunal found that the assessee had provided sufficient documentary evidence to prove that the goods were returned without any sale and that the excise duty burden was not passed on to the consignees.
- The Tribunal also noted that the proceedings for the cancellation of the refund were barred by limitation, as the show cause notice was issued nearly four years after the refund was granted.

Conclusion:
The High Court dismissed the Revenue's appeal, affirming the Tribunal's decision that there was no unjust enrichment and that Rule 173L was applicable. The court held that the respondent/assessee had provided sufficient evidence to prove that the duty burden was not passed on to the consignees and that the proceedings to cancel the refund were barred by limitation. The substantial questions of law were answered against the Revenue.

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