2012 (12) TMI 832 - AT - Central Excise

Rejection of refund claim - Doctrine of Unjust enrichment - Held that - Both the lower authorities failed to appreciate the fact that when it is apparent on record that the appellant is availing the benefit of SSI exemption under Notification no. 8/2003 and clearing the goods without payment of duty, the question of unjust enrichment does not arise - as the appellant has paid a sum of Rs.1.5 lakhs during the course of investigation & no show-cause notice has been served on the appellant for appropriation of the amount collected by them during the course of investigation impugned order is not sustainable in the eyes of law and same is set aside and appeal is allowed with consequential relief.

Summary

Issues:
Claim of exemption under Notification 8/03, pre-deposit of duty during investigation, rejection of refund claim based on unjust enrichment doctrine.

Analysis:
The case involved the appellant, manufacturers of excisable goods, claiming exemption under Notification 8/03 and not paying excise duty on clearances. They were asked to make a pre-deposit of duty during an investigation, which they complied with by paying Rs.1.5 lakhs. However, no show-cause notice was served on the appellant regarding the non-availment of the exemption benefit, leading them to file a refund claim for the amount paid during the investigation. Both lower authorities rejected the refund claim citing the doctrine of unjust enrichment.

Upon review, it was noted that the appellant, being an SSI unit claiming Notification 8/03 benefit, was not collecting central excise duty from customers. As they were not collecting duty, the question of unjust enrichment did not apply. Additionally, since no show-cause notice was served for the appropriation of the amount collected during the investigation, it was argued that the lower authorities failed to recognize that the appellant was availing the SSI exemption and clearing goods without duty payment, rendering the unjust enrichment argument irrelevant.

In light of these findings, the judgment concluded that the impugned order was not legally sustainable. Consequently, the order was set aside, and the appeal was allowed with consequential relief.