2012 (8) TMI 842 - AT - Central Excise

Denial of refund claim - Unjust enrichment - Held that - The provisions of unjust enrichment does not apply if the refund pertains to credit of duty on excisable goods used as inputs in the manufacture of goods which are exported. In the instant case there is no dispute on this point. Therefore, the lower appellate authority is completely wrong when she says the provisions of unjust enrichment are attracted. Reliance placed on Mafatlal Inds. case by the lower appellate authority is also incorrect inasmuch as the said decision pertains to a situation where the provisions of unjust enrichment would apply. When Section 11B providing for grant of refund of excise duty specifically provides that in certain specified situations, the provisions of unjust enrichment shall not apply, the law has to be interpreted and enforced accordingly - Following decision of Asst. Comm. v. Indo Nippon 2002 (8) TMI 834 - SUPREME COURT OF INDIA - Decided in favour of assessee.

Summary

Issues:
Refund claim rejection based on unjust enrichment principle.

Analysis:
The case involves an appeal against the rejection of a refund claim by the Commissioner of Customs (Appeals), Mumbai-III. The appellant, M/s. Sai Creation, filed a refund claim for unutilized credit balance in their CENVAT account attributable to inputs used in the manufacture of goods cleared for export. The Tribunal initially allowed the refund, but the revenue appealed, arguing that the aspect of unjust enrichment was not examined by the jurisdictional Asst. Commissioner. The lower appellate authority upheld the appeal, citing the need to prove unjust enrichment based on Supreme Court decisions. The appellant contended that unjust enrichment provisions do not apply when the refund relates to credit of duty on excisable goods used as inputs for export goods. They referenced judgments supporting their position, including one from the High Court of Gujarat and another from Opel Alloys P. Ltd.

The Tribunal carefully considered the submissions and found that the provisions of unjust enrichment do not apply when the refund pertains to credit of duty on excisable goods used as inputs for exported goods. The Tribunal disagreed with the lower appellate authority's interpretation of the law and cited precedents to support its decision. The Hon'ble High Court of Gujarat and the Apex Court had previously ruled that unjust enrichment does not apply in cases of CENVAT credit taken on inputs used in export goods. Following these precedents, the Tribunal concluded that the principles of unjust enrichment should not be applied in the present case. Consequently, the Tribunal set aside the impugned order, allowed the appeal, and provided consequential relief. The stay application was also disposed of accordingly.