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2015 (8) TMI 1173 - HC - Central ExciseDenial of refund claim - Whether or not, the refund of Central Excise duty is admissible under Section 11B of the Central Excise Act, 1944, if the same is invoiced and collected and thereby passed on to the purchasers and sought to be claimed on the basis of the credit notes issued to the buyers after clearance of the goods thereby post transaction credit notes - Held that - excise duty paid by the Industry or assessee and it has been passed on to the consumers or the purchasers of the goods, then the assessee is not entitled to claim any refund of the amount from the Central Excise Department, as such a claim would amount to unjust enrichment. This decision has been followed by the Apex Court in the case of SAHAKARI KHAND UDYOG MANDAL LTD. VS. COMMISSIONER OF CENTRAL EXCISE & CUSTOMS reported in 2005 (3) TMI 116 - SUPREME COURT OF INDIA . In this view of the matter, we are of the considered opinion that the view taken by CESTAT in directing refund of the amount to the assessee is illegal and deserves to be set aside - Decided in favour of Revenue.
Issues:
Refund of Central Excise duty under Section 11B - Admissibility when duty is invoiced and collected, passed on to purchasers, and claimed through post-transaction credit notes. Analysis: The High Court considered the issue of whether the refund of Central Excise duty is permissible under Section 11B of the Central Excise Act, 1944 when the duty has been invoiced, collected, passed on to purchasers, and subsequently claimed through credit notes issued post-transaction. The revenue contended that if the assessee has already collected the excise duty and passed it on to the purchasers, refunding the amount would result in unjust enrichment for the assessee. The revenue relied on the Supreme Court judgments in the cases of MAFATLAL INDUSTRIES LTD. & OTHERS VS. UNION OF INDIA and SAHAKARI KHAND UDYOG MANDAL LTD. VS. COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, which held that if excise duty has been passed on to consumers, the assessee cannot claim a refund as it would lead to unjust enrichment. In light of these decisions, the High Court concluded that the direction by CESTAT to refund the amount to the assessee was illegal. Therefore, the High Court set aside the decision and allowed the appeal in favor of the revenue, answering the substantial question of law against the assessee. This judgment clarifies the principle of unjust enrichment concerning the refund of Central Excise duty under Section 11B of the Central Excise Act, 1944. The court emphasized that if the excise duty has been collected from purchasers and passed on to them, the assessee cannot claim a refund as it would result in unjust enrichment. The court's decision was based on the precedents set by the Supreme Court in similar cases, highlighting the importance of not allowing the assessee to benefit from a refund that would essentially be a windfall due to passing on the duty to consumers. By setting aside the direction for a refund, the High Court upheld the principle that refunds in such cases would not be permissible to prevent unjust enrichment for the assessee.
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