2015 (10) TMI 1194 - AT - Central Excise

Refund claim - Rejection of interest claim - Unjust enrichment - Held that - Section 11 B of the said Act is not applicable in respect of claim of interest. Revenue has not filed appeal against such finding. On a query from the Bench, the Learned Advocate submits that the principle of unjust enrichment is not applicable in respect of claim of interest, which was introduced with effect from 10.05.2008 - period of dispute is before 10.05.2008. We have also noticed the Commissioner (Appeals) categorically observed that Section 11 B of the Act would not be applicable and therefore, the principle of unjust enrichment would also not be applicable. Thus, the rejection of refund of interest is not sustainable. - rejection of claim of interest of ₹ 10,16,738.00 is set-aside - Decided in favour of assessee.

Summary

Issues: Rejection of claim of interest on the grounds of being time-barred and unjust enrichment.

Analysis:
1. The appellant filed an appeal against the rejection of a claim of interest amounting to Rs. 10,16,738. The original authority rejected Rs. 8,40,358 as time-barred and the remaining Rs. 1,76,380 on the basis of unjust enrichment.

2. The Commissioner (Appeals) held that the appellant is eligible for the claim of interest for both amounts as Section 11 B of the Central Excise Act, 1944 does not apply to interest claims. However, the appellant failed to prove that the interest amount had not been passed on to the buyer or consumer.

3. The Commissioner (Appeals) found that Section 11 B of the Act does not apply to interest refunds, and the principle of unjust enrichment is not applicable to interest claims, especially before 10.05.2008. The Revenue did not appeal against this finding.

4. The Tribunal disagreed with the Revenue's argument that unjust enrichment should apply to interest refunds. They cited a previous case where it was held that unjust enrichment does not apply to interest refunds before 10.05.2008 when the relevant provisions were amended.

5. Since the dispute in this case was before 10.05.2008, the Tribunal concluded that Section 11 B of the Act and the principle of unjust enrichment do not apply to the claim of interest. Therefore, the rejection of the interest refund was deemed unsustainable.

6. Consequently, the Tribunal set aside the rejection of the interest claim of Rs. 10,16,738, and the appeal filed by the appellant was allowed.