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2011 (8) TMI 774 - AT - Central ExciseUnjust Enrichment - Manufacturing of Drip Irrigation System and Sprinkler Irrigation System (DIS/SIS) - exempted final products - Intermediate product HDPE/LDPE classified under Chapter 84 NIL rate of Duty - Duty paid under protest - Held That - Report of Asst. Director (COST) not supplied is a gross violation of principle of natural justice. In view of CCE v. Flow Tech Power (2005 - TMI - 54073 - CESTAT, SOUTH ZONAL BENCH, CHENNAI), case remanded back
Issues:
1. Appeal against the order of Commissioner (Appeals) sanctioning refund claim. 2. Denial of refund claim based on the unjust enrichment principle. 3. Classification dispute regarding HDPE/LDPE pipes and tubes. 4. Burden of proof on unjust enrichment. 5. Violation of principle of natural justice. Analysis: Issue 1: Appeal against the order of Commissioner (Appeals) sanctioning refund claim: The Revenue appealed against the order of Commissioner (Appeals) sanctioning a refund claim of Rs.99,11,410. The assessee also filed appeals against the denial of the refund claim based on the unjust enrichment principle. The Tribunal considered both sides' arguments and examined whether the assessees were entitled to the refund claim. Issue 2: Denial of refund claim based on the unjust enrichment principle: The dispute centered on whether the assessees had paid duty under protest for HDPE/LDPE pipes, which were captively consumed in manufacturing the final exempted products. The Revenue contended that the burden of unjust enrichment had not been discharged by the assessees. The Tribunal analyzed the arguments presented by both parties and the applicability of the unjust enrichment principle to the case. Issue 3: Classification dispute regarding HDPE/LDPE pipes and tubes: A classification dispute arose regarding the HDPE/LDPE pipes and tubes used in manufacturing the 'Drip Irrigation System' and 'Sprinkler Irrigation System.' The Revenue argued that these pipes should be classified under Chapter 39 and be chargeable to duty, while the assessees claimed they should be classified under Chapter 84, attracting a nil rate of duty. The Tribunal previously held in favor of the assessees, classifying the pipes under Chapter 84. Issue 4: Burden of proof on unjust enrichment: The assessees argued that as the final products and the HDPE/LDPE pipes were exempted from duty, the duty paid under protest was refundable. They contended that the unjust enrichment principle did not apply to their case as the price of the end product remained unchanged. The Revenue, however, emphasized the importance of a report from the Assistant Director (Cost) which indicated that the duty component was included in the cost of the pipes. The Tribunal considered these arguments while assessing the burden of proof on unjust enrichment. Issue 5: Violation of principle of natural justice: The Tribunal noted a violation of the principle of natural justice as the report of the Assistant Director (Cost) was not shown to the assessee during the proceedings. Additionally, the decision of the Hon'ble High Court of Madras in a relevant case was not produced before the lower authorities. Due to these discrepancies, the Tribunal set aside the impugned orders and remanded the matter back to the adjudicating authority for a fresh examination after providing the necessary documents to the assessee. In conclusion, the Tribunal allowed the appeals by way of remand and directed the adjudicating authority to pass the order within three months, ensuring the assessee's opportunity to present their case. The report of the Assistant Director (Cost) was deemed non-binding in one of the appeals.
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