2016 (3) TMI 134 - AT - Central Excise

Refund claim - whether claim filed by the appellant is hit by the bar of unjust enrichment in terms of Section 11B of the Central Excise Act, 1944? - Held that - It is apparently not possible to point out as to out of which exact fund the Central Excise Duty was paid to the Government. The appellants derived their income mainly from supply of electricity. They also apparently get subsidy from the Government. As already noted, these two funds/ income have no linkage to the excise duty paid under protest by the appellant. We find that the ld. Commissioner (Appeals) observed the appellants would be deemed to have discharged the onus of absence of unjust enrichment, if excise duty payment was proved to be out of the appellants own fund. We are unable to appreciate such observation. The duty has been paid by the appellants apparently from their fund. There is no identity of different funds and individual records for different receipts for a one to one co-relation as to which money has gone to which expenditure. Such stipulation will be impracticable. The Hon ble Madras High Court in Sescot Sheet Metal Works Ltd. vs. CESTAT, Chennai (2015 (4) TMI 386 - MADRAS HIGH COURT) held in the case of State owned Undertakings which are funded, controlled and monitored by the State Government, the doctrine of unjust enrichment will not arise. Based on the analysis and discussion as above, we find that there is no case for unjust enrichment against the appellant both on the reason of the appellant being a State Organization and also on merit of not passing on the duty to another person. - Decided in favour of assessee

Summary

Issues:
- Unjust enrichment on refund claim filed by the appellant.

Analysis:
1. The appeal was against the order of the Commissioner (Appeals) regarding the liability of Central Excise Duty on activities related to the erection of transmission towers. The dispute originated in 1976, and a refund claim was filed in 2006. The Jurisdictional Deputy Commissioner rejected the claim citing unjust enrichment.

2. The appellant contested the rejection, stating that refunds were allowed for later periods on similar facts. The Commissioner (Appeals) directed a fresh decision, requiring detailed accounting records to determine the source of funds used to pay the duty. The appellant appealed to the Tribunal.

3. The appellant argued that the duty had not been passed on to any person, as the towers were not sold, and no consideration was received for their use. They cited a similar case involving PCC Poles where unjust enrichment was not found. The appellant also referenced a judgment stating that unjust enrichment does not apply to State Undertakings.

4. The Department insisted on the burden of proof being on the appellant to show no passing on of duty. The Tribunal noted the appellant's status as a State Government Organization involved in electricity distribution. The tariff rates were fixed by the State, and the duty payment did not impact these rates.

5. The Tribunal referred to a Supreme Court decision stating that unjust enrichment does not apply to the State. The appellant's income sources, mainly electricity sales and government subsidies, were deemed unrelated to the duty payment. The Tribunal rejected the requirement to identify the exact fund used for duty payment.

6. Citing the Supreme Court and Madras High Court decisions, the Tribunal ruled in favor of the appellant, stating that unjust enrichment did not apply to State Undertakings. The judgment emphasized that the duty had not been passed on to another person, leading to the allowance of the appeal with consequential relief.