2012 (11) TMI 144 - AT - Central Excise

Refund of pre-deposit under Section 35F of Central Excise Act, 1944 unjust enrichment Held that - Amount is not passed on to others - unjust enrichment clause did not apply to such a refund since deposited amount is not passed on to the others - principle of unjust enrichment could not apply in this case refund allowed

Summary

Issues:
- Appeal against Order-in-Appeal upholding refund grant
- Application of unjust enrichment principle to pre-deposit refund

Analysis:
1. The appeal was filed against Order-in-Appeal No. 17/Kol-VII/2011 dated 4-2-2011, where the Commissioner (Appeals) upheld the lower adjudicating authority's decision to grant a refund. The Respondent had initially deposited Rs. 55,814 under Section 35F of the Central Excise Act, 1944, as a pre-deposit following an order by Commissioner (Appeal-I) dated 31-3-2008. Subsequently, the Commissioner (Appeals) ruled in favor of the Respondent, leading to the refund application. The lower adjudicating authority approved the refund, prompting the Department to challenge this decision before the Commissioner (Appeals), who upheld the lower authority's order, resulting in the current appeal.

2. The main contention raised by the Revenue was based on a Mumbai Tribunal decision in the case of Poona Rolling Mills v. CCE, Pune-I, where it was held that pre-deposit falls under the unjust enrichment principle. The Revenue argued that this aspect was not examined in the present case. However, the Respondent's representative highlighted that the lower adjudicating authority specifically noted in its order that the unjust enrichment clause did not apply in this scenario since the deposited amount was not passed on to others. Therefore, the principle of unjust enrichment was deemed inapplicable, and the cited case by the Additional Commissioner was considered irrelevant.

3. Upon reviewing the submissions and the case record, the Tribunal observed that this matter concerned a refund of a pre-deposit under Section 35F of the Central Excise Act, 1944. The Tribunal emphasized that the principle of unjust enrichment pertains to the duty not to deposit. Referring to the Mumbai Tribunal's decision in Poona Rolling Mills, it was noted that in that case, the deposited amount had been passed on to customers. However, in the present case, it was evident that the amount had not been passed on to others. As the Department failed to provide any evidence to the contrary, the Tribunal concluded that the Mumbai Tribunal's decision did not apply. Consequently, the Tribunal found no grounds to interfere with the lower authorities' concurrent findings. The Department's appeal was dismissed for lacking merit, and the Commissioner (Appeal)'s order was upheld.

4. In conclusion, the Tribunal dismissed the appeal, affirming the decision in the open court.