2016 (11) TMI 1272 - AT - Central Excise

Unjust enrichment - refund of credit which was reversed under protest during dispute - Held that - I find that the original dispute raised by the department is that the admissibility of Cenvat credit in respect of packing material. Due to the dispute, appellant reversed the Cenvat credit. Tribunal. Accordingly, amount reversed was claimed as a refund. I find that this is not a case of refund of excise duty paid on final product whereas originally it is an amount of Cenvat credit which was reversed under protest and on succeeding, the appellant claimed refund. In my considered view, even there is no need of filing refund claim in case of succeeding in a matter of dispute on Cenvat credit. In the present case, even if the amount is towards reversal of Cenvat credit but it is as good as availment of fresh Cenvat credit therefore unjust enrichment is not applicable for availment of Cenvat credit. In the present case also refund of Cenvat credit need not to be under gone the test of unjust enrichment. Appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
1. Admissibility of Cenvat credit on packing material.
2. Applicability of principle of unjust enrichment in the case of Cenvat credit refund.

Issue 1: Admissibility of Cenvat credit on packing material
The case involved the appellant, engaged in manufacturing excisable goods, specifically pressure cookers. The appellant used duty paid packing material such as master cartons, EMP cartons, BOPP tapes, and cello tapes for packing the final product, availing Cenvat credit on the duty paid for the packing material. The dispute arose regarding the admissibility of Cenvat credit on master cartons. The Tribunal initially held that Cenvat credit on master cartons would be available to the appellant from a certain period onwards and remanded the matter. The appellant then filed a refund claim based on the Tribunal's order. The Revenue challenged the refund, arguing that the principle of unjust enrichment applied. The original adjudicating authority credited the refund, but the Revenue appealed, contending that unjust enrichment should be considered. The Commissioner(Appeals) set aside the original order, leading to the appellant's appeal before the Tribunal.

Issue 2: Applicability of principle of unjust enrichment in Cenvat credit refund
The appellant argued that the refund claimed was for Cenvat credit, not excise duty paid on finished goods, thus unjust enrichment should not apply. The appellant relied on various judgments to support this argument. On the other hand, the Revenue reiterated its stance on the impugned order. The Tribunal considered both sides' submissions and examined the record. The Tribunal found that the dispute centered around the admissibility of Cenvat credit on packing material, which the appellant had reversed under protest and later claimed as a refund upon succeeding in the matter. The Tribunal concluded that since the amount was akin to availing fresh Cenvat credit, the principle of unjust enrichment did not apply in this case. Citing the judgments provided by the appellant's counsel, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the principle of unjust enrichment did not apply to the refund claim of Cenvat credit on packing material. The Tribunal's decision was based on the understanding that the disputed amount was treated as fresh Cenvat credit, not a refund of excise duty on final products.