2007 (6) TMI 86 - AT - Central Excise

Refund - Appellant claim for refund of excise duty paid on the intermediate goods captively consumed for the manufacture of final product is covered under exemption notification for the impugned period - Held that appellant entitle for refund and allowed refund

Summary

Issues:
Refund claim rejection on the ground of limitation, consideration of unjust enrichment, applicability of exemption notification under Section 11C of the Central Excise Act, 1944, passing on the incidence of duty to the buyer.

Analysis:
The appellant filed a refund claim of Rs. 12,00,000/- on 1-4-1991, which was initially rejected by the adjudicating authority citing limitation. However, on appeal, the Ld. Commissioner (Appeals) set aside the order-in-original, stating that limitation does not apply and remanded the matter to consider unjust enrichment. The subsequent proceedings found that the appellants did not meet the conditions of Section 11B regarding non-passing of duty incidence to customers. Despite an appeal, the Ld. Commissioner (Appeals) upheld the original order.

Shri C.K. Hande argued that the case aligns with a judgment from the Panjab and Haryana High Court, suggesting that duty payment post-consumption of intermediate products for final product manufacturing negates unjust enrichment. On the contrary, the Ld. SDR contended that proving non-passing of duty incidence is essential even if payment occurs after final product clearance.

Upon review, it was revealed that the intermediate products' duty demand spanned from 22-5-88 to 22-11-88, with an amount of Rs. 12,00,000/- deposited under protest. Notably, a Central Government notification exempted these products under Section 11C for the relevant period, indicating no unjust enrichment due to subsequent duty payment for final products. The judgment cited the Panjab & Haryana High Court's decision, emphasizing that the duty incidence could not be transferred post-clearance, thus dismissing the Revenue's plea.

Consequently, the impugned order directing the refund amount to the consumer welfare fund was set aside, and the appeal was allowed with consequential relief, aligning with the exemption notification and the High Court's decision on non-passing of duty incidence post-clearance.