2011 (3) TMI 577 - HC - Central Excise

Refund - Provisional assessment - Rule 173C of the Central Excise Rules, 1944 - it is clear that the Appellate Authority, the Tribunal and the department proceeds on the assumption that this is a case of claim for refund by the assessee under Section 11B of the Excise Act, 1944 and therefore, the burden of unjust enrichment applies - Held thata - The refund is paid in pursuance of the finalization of the provisional assessment order and in fact, the Assessing Authority was right in holding that the doctrine of unjust enrichment does not apply in the facts of the case relying on the judgment of the Constitution Bench as well as subsequent decisions - Appeal is dismissed

Summary

Issues:
Challenge to Tribunal's order upholding refund of excess duty paid to the assessee, application of doctrine of unjust enrichment, interpretation of relevant legal provisions.

Analysis:
The case involved a challenge by the revenue against the Tribunal's decision upholding the refund of excess duty paid by the assessee. The assessee, a cigarette manufacturer, was initially asked to pay a differential duty of approximately Rs. 583.19 crores. Upon appeal, the Assessing Authority found that the assessee had overpaid by Rs. 3,76,29,657.53 for the period in question. Despite producing documents to substantiate deductions claimed, the refund was credited to the Consumer Welfare Fund invoking the doctrine of unjust enrichment. The Commissioner of Appeals later allowed the refund, adjusted against other dues, resulting in a refund of Rs. 1,26,66,595. The revenue appealed to the Tribunal, which upheld the refund but applied the doctrine of unjust enrichment based on a Punjab and Haryana High Court judgment.

The appellant contended that the doctrine of unjust enrichment should not apply based on a Supreme Court judgment and argued that the burden of proof regarding passing on the duty to customers was not met by the assessee. The Tribunal, while accepting the revenue's case, relied on the Punjab and Haryana High Court judgment, which the appellant deemed illegal. The respondent supported the Tribunal's decision.

The Court noted that the case was not a claim for refund under Section 11B of the Excise Act, as the duty was paid under provisional assessment, later found to be in excess. Citing Supreme Court judgments, the Court clarified that the doctrine of unjust enrichment did not apply to refunds arising from finalization of provisional assessments. The Court emphasized that the revenue's claim was based on the incorrect assumption that the refund was under Section 11B. Consequently, the Court found no substantial question of law and dismissed the appeal.

In conclusion, the Court dismissed the revenue's appeal, ruling that the doctrine of unjust enrichment did not apply in this case as the refund was based on finalization of provisional assessment and not under Section 11B. The Court clarified the legal position based on relevant Supreme Court judgments, emphasizing that the revenue's claim was unfounded due to the incorrect interpretation of the nature of the refund claim.