2014 (8) TMI 222 - AT - Central Excise

Denial of refund claim - Unjust enrichment - whether the appellant is eligible for the refund of an amount debited by them during the investigation; culmination of which has ended in favour of the appellant by the order of Tribunal - Held that - if any amount is paid to the Revenue during the investigation and successfully challenged before the higher judicial fora, such an amount needs to be considered as deposit and refund needs to be sanctioned. In the case in hand, it is the issue and having succeeded before the Tribunal, the Revenue could not hold back an amount which is due to the assessee. when an assessee prefers an appeal, it itself tantamounts not to accepting the orders of the Revenue and the amount paid is in dispute. In my view, the question of unjust enrichment also will not arise - amounts were debited by the appellant on an allegation that they have removed the goods without payment of duty; allegation set aside by the higher court - Following decision of CCE., Chandigarh vs Modi Oil & General Mills 2007 (1) TMI 31 - HIGH COURT , PUNJAB & HARYANA - Decided in favour of assessee.

Summary

Issues:
- Refund of amount debited during investigation
- Applicability of settled law on refund claims
- Unjust enrichment and payment under protest

Refund of amount debited during investigation:
The appellant filed an appeal against an order which set aside a duty demand but upheld confiscation with a redemption fine. During the appeal, the appellant debited Rs. 8,35,000 in cenvat credit based on a preventive case investigation. Both authorities contended that the amount debited was not under protest and not deposited as per any directive, thus rejecting the refund claim. The appellant argued that the amount should be refunded as per settled law when payment during investigation is challenged successfully before higher fora. Various tribunal decisions and the Supreme Court's ruling in Mafatlal Industries Ltd. supported this view. The High Court's decision in CCE vs. Modi Oil & General Mills clarified unjust enrichment does not apply post-clearance payments litigated in judicial fora, considering them as paid under protest.

Applicability of settled law on refund claims:
The Tribunal considered whether the appellant was entitled to a refund of the debited amount following a successful challenge in the investigation that ended favorably for the appellant. The undisputed facts revealed that the appellant was directed to deposit Rs. 8,35,000 during the investigation, which concluded in the appellant's favor without any contestation in higher courts. The Tribunal concluded that the amount should be treated as a deposit, following the precedent that successful challenges to amounts paid during investigations warrant refunds. The Tribunal disagreed with the authorities' argument that the payment was not made under protest, as filing an appeal inherently disputes the revenue's orders, making the payment contentious. The Tribunal also noted that the High Court's decision directly supported the appellant's position, rejecting the notion of unjust enrichment in this context.

Unjust enrichment and payment under protest:
The Tribunal set aside the impugned order and allowed the appeal, emphasizing that the amount debited during investigation should be refunded to the appellant. The Tribunal's decision was based on the established legal principles that successful challenges to payments made during investigations entitle the payee to refunds, regardless of protest at the time of payment. The Tribunal highlighted the High Court's ruling as a direct precedent in favor of the appellant, supporting the refund claim and rejecting the concept of unjust enrichment in this specific scenario.