2016 (11) TMI 693 - AT - Central Excise

Refund claim - reversal of CENVAT credit on capital goods at the time of removal which is not required - principles of unjust enrichment - Held that - There is no reason to decide the issue of unjust enrichment. In that circumstance, I hold that the quantum of refund is not to be entertained in this appeal - With regard to the unjust enrichment, I find that the appellant has not recovered any amount towards the amount reversed from the buyers and to that extent the buyer has issued No.E/1610/2008 CCE, Gurgaon circumstance, the appellant has been able to pass the bar of unjust enrichment. Accordingly, the impugned order deserves no merit and the same is set aside. The appellant is entitled to refund claim as considered by the adjudicating authority in this case - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection on unjust enrichment grounds.

Analysis:
The appellant appealed against the rejection of a refund claim due to unjust enrichment. The case involved the removal of capital goods used in manufacturing final products, with the appellant initially reversing the credit availed as per Cenvat Credit Rules. Subsequently, based on a Tribunal judgment, the appellant filed a refund claim. The Commissioner (Appeals) remanded the matter to the adjudicating authority to consider unjust enrichment. The Tribunal upheld this decision, leading to the current appeal.

In the remand proceedings, the adjudicating authority and Commissioner (Appeals) rejected the refund claim, citing failure to pass the unjust enrichment test. The appellant contended that no amounts were recovered from buyers, supported by issued debit notes, thus meeting the unjust enrichment requirement. The appellant sought the refund claim based on this argument.

During the hearing, the appellant's counsel argued for the refund claim, emphasizing the lack of recovery from buyers as evidence of passing the unjust enrichment test. In contrast, the respondent's representative referred to the previous Tribunal decision rejecting the appeal and insisted on considering the issue of unjust enrichment in the current proceedings.

After hearing both parties, the Member (Judicial) reviewed the case. Considering the previous Tribunal decision and the lack of reason to reevaluate unjust enrichment, the Member concluded that the quantum of refund was not to be revisited in this appeal. However, regarding unjust enrichment, it was found that the appellant had indeed not recovered the reversed amount from buyers, as evidenced by issued debit notes. Consequently, the impugned order was set aside, and the appellant was deemed entitled to the refund claim as determined by the adjudicating authority in the present case.

In the final disposition, the appeal was resolved in favor of the appellant, granting the refund claim based on the findings related to unjust enrichment.