2011 (4) TMI 263 - AT - Customs

Refund - unjust enrichment - refund of excess duty paid - As there is no doubt about nature of the goods being capital goods, in view of the decisions cited above, bar of unjust enrichment is squarely applicable to the present refund claims involved in the appeals. - Bar of unjust enrichment is applicable capital goods or any captive consumption - Bar of unjust enrichment is applicable to the PSU.

Summary

Issues:
Refund claim rejection based on unjust enrichment for duty paid on capital goods by a PSU.

Analysis:
1. Refund Claim Basis: The appeals involved M/s ONGC's refund claims for excess duty paid, citing a 5% trade discount on invoice value. The Assistant Commissioner accepted the merit but rejected the claims due to unjust enrichment, crediting the amounts to the Consumer Welfare Fund.

2. PSU Status Argument: ONGC argued that being a Public Sector Unit (PSU), the bar of unjust enrichment should not apply. They cited the Karnataka High Court and Tribunal judgments to support their contention that unjust enrichment does not apply to PSUs.

3. Control Over Price: ONGC emphasized that the government fixes their prices, asserting they have no control over pricing. They referred to various Supreme Court and Tribunal decisions to argue against the application of unjust enrichment in cases where prices are government-controlled.

4. Burden Passing: ONGC claimed they did not pass on the duty burden to customers when filing the refund claims, asserting that the unjust enrichment clause should not apply. They highlighted their lack of control by the Government at the time of the claims.

5. Judicial Precedents: The Revenue argued that ONGC's own case history established the applicability of unjust enrichment for duty on capital goods. The Supreme Court's dismissal of ONGC's appeals and petitions supported the stance that unjust enrichment applies to ONGC in such cases.

6. Final Decision: After considering both sides and case records, the judge found the goods involved were capital goods, as claimed by ONGC. Given the Supreme Court's previous decisions upholding unjust enrichment for ONGC in similar cases, the judge concluded that the bar of unjust enrichment applied to the present refund claims, leading to the dismissal of the appeals.