2007 (9) TMI 83 - AT - Central Excise

However, refund arising on finalization of assessment is not governed by Rule 9(B)(5) Unjust enrichment But if finalization order is appealed against and allowed, then refund claim arising as a consequence of appellate order will be governed by principle of unjust enrichment

Summary

Issues:
1. Erroneous refund granted to the respondent.
2. Recovery of the disputed amount.
3. Unjust enrichment angle in refund sanction.
4. Application of Section 11B of the Central Excise Act, 1944.
5. Challenge to demand under Section 11A without reviewing the refund order.
6. Provisions of Section 11B in cases of finalization of provisional assessment.
7. Interpretation of Apex Court's judgment in Mafatlal Industries Ltd. v. UOI.

Analysis:
1. The appeal was filed by the Revenue against the Order-in-Appeal vacating the demand of Rs. 3,31,365/- as an erroneous refund granted to the respondent. The original authority had ordered recovery of the amount as the respondent failed to prove they did not collect it from their customers.
2. The provisional assessment of clearances led to a differential duty payable by the respondent. A refund was sanctioned, but a Show Cause Notice was issued for recovery, alleging unjust enrichment. The Assistant Commissioner ordered recovery, which was later overturned by the Commissioner (Appeals).
3. The Revenue argued that the refund was erroneously sanctioned without considering unjust enrichment. They cited legal precedents to support their claim that refund claims must prove non-passing of duty burden. The respondent was required to provide evidence to refute unjust enrichment.
4. The jurisdictional Assistant Commissioner finalized the provisional assessment, leading to a refund. The Revenue contended that post-amendment, Section 11B applied to refunds post-August 1998. Legal references were made to support this argument.
5. The challenge was made regarding the demand under Section 11A without reviewing the refund order under Section 35E. Legal judgments were cited to justify the demand without revising the order.
6. The case involved whether Section 11B applied to the refund arising from the finalization of provisional assessment. Legal arguments were presented to show that Section 11B was not applicable in such cases.
7. The Apex Court's judgment in Mafatlal Industries Ltd. v. UOI was crucial in determining the application of Section 11B and the doctrine of unjust enrichment. Various case laws were cited by both parties to support their interpretations of the law.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal filed by the Revenue. The decision was based on the interpretation of legal provisions, precedents, and the application of Section 11B in cases of finalization of provisional assessment. The judgment highlighted the importance of proving non-unjust enrichment in refund claims and the necessity of reviewing refund orders under relevant sections of the Central Excise Act.