2010 (12) TMI 995 - HC - Central Excise

Voluntary payment made to avoid interest penalty - whether be treated as pre-deposit under Section 35-F of the Central Excise Act 1944 and accordingly the refund of the same not subjected to the test of unjust enrichment? - Held that - The controversy involved in the present appeal is no longer res integra inasmuch as this Court in the case of Commissioner of Customs (Preventive) v. Ghaziabad Ship Breakers Ltd. 2010 (10) TMI 151 - GUJARAT HIGH COURT in the context of the provisions of Section 129E of the Customs Act 1962 which are in pari materia with the provisions of Section 35F of the Central Excise Act 1944 has held that any amount deposited during the pendency of an appeal would be by way of pre-deposit under Section 129E of the Customs Act and has to be treated accordingly. The controversy in issue in the present appeal therefore stands concluded against the revenue by the said decision of this Court.

Summary

Issues:
Challenge to order under Section 35G of the Central Excise Act, 1944 regarding voluntary payment and unjust enrichment.

Analysis:
1. The appellant, Commissioner of Central Excise & Customs, challenged an order by the Tribunal questioning the treatment of voluntary payment as a pre-deposit under Section 35-F of the Act. The appellant raised concerns about unjust enrichment and the application of relevant precedents.

2. The respondent, a Customs House Agent, faced a show cause notice regarding cenvat credit availed on input services. The adjudicating authority disallowed credit, leading to an appeal where the credit was deemed admissible except for services with no nexus to output service. The penalty was waived, and the refund claims were filed and sanctioned by the lower authority, later upheld by the Commissioner (Appeals) and the Tribunal.

3. The appellant contended that the voluntary payment made by the assessee to avoid interest should not be considered a pre-deposit under Section 35F, as it raises issues of unjust enrichment. The main question was whether the amount paid voluntarily after the adjudicating authority's order should be treated as a deposit under Section 35F.

4. The High Court referred to a previous judgment regarding the Customs Act, stating that any amount deposited during an appeal is considered a pre-deposit and should be treated as such. The court held that the controversy in the present appeal had already been settled against the revenue based on the previous decision.

5. Consequently, the High Court dismissed the appeal based on the precedent set in a previous judgment, affirming that any amount deposited during the appeal process is to be treated as a pre-deposit under the relevant provisions of the Act. The court upheld the treatment of the voluntary payment as a pre-deposit and rejected the appellant's arguments regarding unjust enrichment.