2011 (1) TMI 1076 - HC - Central Excise

Refund - show cause notice was issued under Section 11-B of the Central Excise Act, 1944 - undue enrichment - Held that - As decided in cases of Asea Brown Boveri Ltd. v. CCE, Bangalore 1998 (5) TMI 157 - CEGAT, MADRAS & CCE, Indore Versus MEDI CAPS LTD. 2001 (12) TMI 103 - CEGAT, NEW DELHI that the doctrine of unjust enrichment is not applicable to the refund claims under Rule 173-L and the ratio of the said decisions is squarely applicable to the instant case - In view of the findings recorded and TRIVENI CHEMICALS LTD. Versus UNION OF INDIA 2006 (12) TMI 39 - SUPREME COURT OF INDIA it has to be held that the matter which stand concluded, finally between the parties cannot be reopened by invoking Section 11B of the Central Excise Act, 1944. Decided in favor of the assessee

Issues Involved:
1. Legality of the show cause notice issued under Section 11-B of the Central Excise Act, 1944.
2. Applicability of the principle of undue enrichment to the refund claims under Rule 173-L of the Central Excise Rules, 1944.
3. Finality of previous orders and judgments regarding the refund claims.

Detailed Analysis:

1. Legality of the Show Cause Notice:
The petitioner challenged the show cause notice issued under Section 11-B of the Central Excise Act, 1944, arguing that it was barred by the principle of res judicata and Order II Rule 2 since the issue had already been decided by the appellate authority and had attained finality. The respondent contended that under sub-clause (3) of Section 11-B, it was permissible to issue the show cause notice to ensure that the refund does not result in undue enrichment. The court found merit in the petitioner's argument, noting that the matter of refund, including the question of undue enrichment, had already been conclusively decided in favor of the petitioner.

2. Applicability of the Principle of Undue Enrichment:
The appellate authority had previously determined that the principle of unjust enrichment did not apply to refund claims under Rule 173-L of the Central Excise Rules, 1944, citing decisions from the Hon'ble CEGAT in cases like Asea Brown Boveri Ltd. v. CCE, Bangalore and CCE, Indore v. Medi Caps Ltd. The respondent argued that the appellate authority's findings were obiter dicta and could not prevent the issuance of a show cause notice under Section 11-B. However, the court upheld the appellate authority's decision, noting that the principle of undue enrichment had been explicitly considered and decided, and thus could not be reopened.

3. Finality of Previous Orders and Judgments:
The petitioner had pursued various appeals, including before the Customs, Excise & Service Tax Appellate Tribunal and the High Court, all of which had ultimately upheld the petitioner's entitlement to the refund. The respondent's reliance on the Supreme Court judgment in Union of India v. Raj Industries was dismissed by the court, as in that case, the refund order was interim and had not attained finality. Conversely, in the present case, the refund order had attained finality, and thus, the show cause notice was deemed invalid.

Conclusion:
The court concluded that the matter of refund, including the issue of undue enrichment, had been conclusively decided in favor of the petitioner and had attained finality. Consequently, the impugned show cause notice issued by the respondent was quashed, and the writ petition was allowed. The court emphasized that issues conclusively settled by judicial authorities cannot be reopened by invoking Section 11-B of the Central Excise Act, 1944.

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