2008 (4) TMI 69 - AT - Central Excise

Refund claims for duty paid under protest on pre-stressed cement concrete poles (PCC poles) duty paid shown as receivable in the balance sheet as certified by the Chartered Accountant and that this amount was never factored into the costs of the aforesaid activities recovered from the consumers matter remanded to reconsider applicability of unjust enrichment appeal allowed by way of remand

Summary

Issues:
1. Rejection of refund claims by Tamil Nadu Electricity Board (TNEB) on grounds of time-barred and unjust enrichment.
2. Transfer of refunded amount to Consumer Welfare Fund leading to rejection on unjust enrichment.
3. Interpretation of Rule 233B of Central Excise Rules regarding payment of duty under protest.
4. Applicability of doctrine of unjust enrichment to TNEB's refund claims.
5. Permissibility of adjusting refund against a demand raised in another Division of the Commissionerate.

Analysis:

1. The judgment involves multiple appeals by TNEB against rejection of refund claims on the basis of being time-barred or unjust enrichment. The appeals were dismissed by the original and appellate authorities. The appeals were related to duty of excise paid on pre-stressed cement concrete poles manufactured and used by TNEB. The rejection was based on the grounds of time limitation and unjust enrichment, even when duty payment under protest was evident from TR-6 challans.

2. In cases where refunds were sanctioned but transferred to the Consumer Welfare Fund, TNEB argued that the duty paid was not passed on to consumers as it was shown as 'receivable' in their balance sheet and not factored into costs recovered from consumers. The Tribunal directed the original authorities to re-examine these cases in light of a previous decision favoring TNEB on the doctrine of unjust enrichment.

3. The Tribunal analyzed Rule 233B of the Central Excise Rules regarding payment of duty under protest. It was argued that the endorsement "UNDER PROTEST" on TR-6 challans should be considered substantial compliance with the rule. The Tribunal accepted this argument, citing relevant judgments, and directed the authorities to reconsider cases where duty was paid under protest but refund claims were rejected as time-barred.

4. The Tribunal considered the applicability of the doctrine of unjust enrichment to TNEB's refund claims. It noted that duty paid on PCC poles was shown as 'receivable' in TNEB's accounts and held that such refund claims did not suffer from unjust enrichment. The Tribunal directed the authorities to re-examine TNEB's cases against the bar of unjust enrichment based on previous decisions.

5. The last issue involved the permissibility of adjusting a refund against a demand raised in another Division of the Commissionerate. The Revenue argued that the demand raised in one Division could be adjusted against a refund granted in another Division under Section 11 of the Central Excise Act. The Tribunal agreed with the Revenue's interpretation of Section 11 and allowed the appeal, setting aside the previous order granting a refund without set off against the demand in another Division.