2015 (4) TMI 122 - SC - Central Excise

Refund claim - retrospective amendment reducing rate of excise duty - Period of limitation - Unjust enrichment - sanctioned claim was ordered to be credited to the Consumer Welfare Fund on account of unjust enrichment - Held that - The notification revising the rate of excise duty was issued on 31.10.2000 and given retrospective effect that is, w.e.f., 01.07.1999. Thus, only on the issuance of this notification, the excise duty was reduced. It would, therefore, be clear that 31.10.2000 is the trigger point which entitled the appellant to claim the refund. In the absence of any such notification there was no cause of action in favour of the appellant to make any such application for refund. As a natural consequence, therefore, the period of limitation has to be reckoned from 31.10.2000. It is not in dispute that application for refund was filed on 19.06.2001 and the period of limitation at that time was one year. The applications for refund were, therefore, clearly within limitation. We do not understand the logic or rationale behind the order of the CESTAT counting the period from July, 1999 for which the excess amount was sought to be refunded. The order of the CESTAT is, therefore, palpably wrong and erroneous in law - appellant is entitled to succeed in the claim of entire amount of ₹ 26,23,366/-. The aforesaid amount shall carry interest of nine per cent per annum (to be calculated from the date when the refund became payable till the date when the amount is actually paid) shall be paid to the appellant within a period of two months - Decided in favour of assessee.

Summary

Issues:
Refund of excise duty, limitation period for refund application, unjust enrichment.

Refund of Excise Duty:
The appellant, engaged in manufacturing gas cylinders, filed a refund application for excise duty amounting to Rs. 26,23,366 for the period from July 1999 to October 2000. The claim was based on the retrospective revision of prices from 1.7.1999. The Deputy Commissioner rejected a part of the claim citing limitation but allowed a portion. The Commissioner (Appeals) partially upheld the claim, stating no unjust enrichment occurred as the duty burden was not passed on. The CESTAT affirmed the Commissioner's decision. The Supreme Court held the appellant entitled to the full refund amount as the refund application was within the limitation period, starting from 31.10.2000, the trigger point for the refund claim.

Limitation Period for Refund Application:
The critical issue was whether the refund applications were filed within the limitation period. The excise duty revision notification on 31.10.2000 triggered the right to claim a refund, as before this date, there was no cause of action. The appellant filed the refund application on 19.06.2001, well within the one-year limitation period then applicable. The CESTAT erred in considering the period from July 1999, which was legally incorrect. The Supreme Court clarified that the applications were timely filed, and the appellant was entitled to the full refund amount.

Unjust Enrichment:
Initially, the Deputy Commissioner rejected the refund claim on grounds of unjust enrichment, implying the duty burden was passed on to buyers. However, the Commissioner (Appeals) overturned this decision based on evidence showing no passing on of the burden. The appellant had credited the excess amount to the two public sector undertakings to whom the cylinders were supplied. The Supreme Court concurred with this finding, stating the appellant was entitled to the entire refund amount of Rs. 26,23,366, with interest at nine percent per annum to be paid within two months from the date of the order.

In conclusion, the Supreme Court allowed the appeal, granting the appellant the full refund amount of Rs. 26,23,366 with interest, emphasizing that the refund applications were filed within the limitation period and no unjust enrichment occurred as the duty burden was not passed on to buyers.