2011 (3) TMI 548 - HC - Central Excise

Doctrine of Unjust Enrichment - It is clear that the assessee has not passed on the duty liability to the customers though initially he had passed on the liability, he has returned the said duty collected from the buyer - Therefore, he is entitled to get back the duty, which he has paid, which in law he was not liable to pay as held by the original authority - Therefore, the Tribunal was justified under the facts of this case in upholding that the Doctrine of Unjust Enrichment is not attracted to the facts of this case - In the facts and circumstances of this case,do not see any infirmity in the order passed by the Tribunal and does not call for any interference - Decided in favour of assessee.

Summary

Issues:
- Applicability of Doctrine of Unjust Enrichment in a case where duty was paid under protest.
- Entitlement of the assessee to a refund of duty paid under protest.
- Interpretation of passing on the burden of duty to customers.
- Justification of the Tribunal's decision regarding the Doctrine of Unjust Enrichment.

Analysis:

The High Court of Karnataka heard an appeal by the revenue challenging a Tribunal order that allowed a refund of duty paid under protest by the assessee, M/s. Om Pharmaceuticals Ltd., for clearing 'self-generated alcohol'. The original authority sanctioned a refund, but the amount was credited to the Consumer Welfare Fund due to unjust enrichment concerns. The assessee contended that they had an understanding with the buyer, who was later reimbursed after the original authority's decision. The Tribunal accepted the assessee's claim, supported by documentary evidence of duty repayment to the buyer, ruling out unjust enrichment and ordering a refund. The revenue appealed, arguing against the refund based on the Doctrine of Unjust Enrichment.

The revenue's counsel contended that as per a Supreme Court judgment, the assessee was not entitled to the refund on the grounds of unjust enrichment. However, the respondent's counsel argued that the Doctrine of Unjust Enrichment applies only if the duty burden is passed on to customers, which did not happen in this case. The duty was collected but later repaid in accordance with the understanding between the assessee and the buyer, indicating no passing on of the liability to customers. Therefore, the Tribunal's decision to uphold the refund was justified as the Doctrine of Unjust Enrichment did not apply.

The High Court upheld the Tribunal's decision, stating that the assessee was entitled to the duty refund since they had not passed on the duty liability to customers. The Court found no error in the Tribunal's ruling and dismissed the revenue's appeal, answering the substantial questions of law in favor of the assessee and against the revenue.