2008 (5) TMI 215 - AT - Central Excise

Assessee claim refund of credit which was wrongly reversed by him applicability of unjust enrichment amount was reversed due to misunderstanding of law, on the ground that they received a discount on price of inputs purchased since supplier of raw material has not claimed any refund of reversed amount, principle of unjust enrichment is not applicable refund allowed

Summary

Issues:
1. Interpretation of Sec. 11B(2)(C) of the Central Excise Act, 1944.
2. Application of the doctrine of unjust enrichment in the case.
3. Reversal of excise duty amount by the respondent.
4. Entitlement to refund of excise duty amount.

Analysis:
1. The main issue in this case revolves around the interpretation of Sec. 11B(2)(C) of the Central Excise Act, 1944. The revenue contended that the doctrine of unjust enrichment applies as the respondent had already received the amount claimed for refund, which was related to the duty paid on inputs used in the manufacture of finished goods. The revenue argued that the value of the finished products included the Cenvat credit availed by the respondent, leading to unjust enrichment. However, the Tribunal referred to a previous ruling and held that the appellant was entitled to take back the credit amount as the duty had been paid, and the supplier did not claim any refund, thus excluding the principle of unjust enrichment.

2. The application of the doctrine of unjust enrichment was crucial in this case. The revenue argued that the respondent had already received the amount claimed for refund, hence the doctrine applied. However, the Tribunal found that the appellant was not within the scope of unjust enrichment as per the provisions of sub-clause (c) to sub-section (2) of Section 11B. The Tribunal emphasized that the appellant was entitled to the credit paid on inputs supplied by the manufacturer, especially when no refund was claimed by the supplier, and the usage of inputs in manufacturing the final product was not disputed. Therefore, the Tribunal concluded that the doctrine of unjust enrichment did not apply in this scenario.

3. The case involved the reversal of an excise duty amount by the respondent, which led to the dispute over the entitlement to a refund. The respondent reversed an amount due to a discount received on the price of inputs purchased, resulting from issues between the supplier and the respondent. Despite the reversal, the supplier did not claim any refund of the excise duty amount. The Tribunal found that the reversal by the respondent was due to a misunderstanding of the law, and there was no question of unjust enrichment in this situation.

4. The final issue was the entitlement to the refund of the excise duty amount. The Tribunal upheld the impugned order, rejecting the appeal filed by the revenue. The Tribunal found that the findings of the Commissioner, which relied on previous Tribunal decisions, were correct and well-reasoned. The Tribunal concluded that the appellant was entitled to take back the credit amount that was wrongly reversed, as the duty had been paid, and no refund was claimed by the supplier. Therefore, the appeal by the revenue was dismissed, and the impugned order was upheld.