2017 (1) TMI 286 - AT - Central Excise

Refund claim - the Tribunal allowed the appeal by way of remand to the original authority to re-determine the quantum of refund claim - the Adjudicating authority determined an amount of ₹ 10,47,536.58 only as refundable, but ordered to transfer the same to the Consumer Welfare Fund in terms of Section 11B(2) read with Section 12B of the Central Excise Act, 1944 and rejected the refund claim of Central Excise duty amounting to ₹ 3,68,119.06, ₹ 6,72,072.91 and ₹ 88,138.23. Held that - the Tribunal followed the decision in the case of Hindustan Lever Ltd. 2004 (7) TMI 112 - CESTAT, NEW DELHI on the issue of applicability of unjust enrichment. It is evident that the respondent themselves stated the facts for non-applicability of unjust enrichment and in this context, the Adjudicating Authority held that the refund is hit by unjust enrichment. The lower authorities have failed to consider the Tribunal s order dated 20.01.2005 in proper perspective in the context of the facts and circumstances of the case - It is appropriate that the Commissioner(Appeals) should have examined the facts of the case in light of the decision of the Tribunal vide order dated 20.01.2005 and to decide afresh after following the principles of natural justice. Appeal filed by revenue is allowed by way of remand.

Summary

Issues:
- Determination of refund claim quantum
- Transfer of refund amount to Consumer Welfare Fund
- Applicability of unjust enrichment doctrine
- Adjudicating authority's decision beyond Tribunal's directions
- Commissioner(Appeals) decision review

Analysis:
1. Determination of refund claim quantum: The Tribunal previously remanded the case to the original authority to re-determine the quantum of refund claim. The Adjudicating authority decided on an amount for refund but ordered it to be transferred to the Consumer Welfare Fund. On appeal, the lower appellate authority allowed the entire claimed amount as refund, leading to the Revenue's appeal against this decision.

2. Transfer of refund amount to Consumer Welfare Fund: The Adjudicating Authority transferred a partial refund amount to the Consumer Welfare Fund in accordance with the Central Excise Act. The respondent argued that the duty incidence was not passed on to buyers, but the Adjudicating Authority found otherwise, indicating that the duties were included in the cost of production and passed on to consumers.

3. Applicability of unjust enrichment doctrine: The Commissioner(Appeals) set aside the Adjudication order, citing that the issue of unjust enrichment had already been decided by the Tribunal in an earlier order. The Tribunal's previous decision highlighted the application of the unjust enrichment doctrine to refund claims, emphasizing that the refund should not be given if the duty incidence had been passed on to another person.

4. Adjudicating authority's decision beyond Tribunal's directions: The Adjudicating authority's decision was challenged as going beyond the Tribunal's directions from the previous order. The respondent argued that the Adjudicating authority exceeded its mandate, while the Revenue contended that the issue of unjust enrichment needed further examination.

5. Commissioner(Appeals) decision review: The Commissioner(Appeals) reviewed the case in light of the Tribunal's earlier decision and allowed the appeal based on the Tribunal's direction to re-determine the refund quantum. However, the Tribunal found that the lower authorities failed to consider the previous order properly and remanded the matter back to the Commissioner(Appeals) for a fresh decision following the principles of natural justice.

In conclusion, the Tribunal set aside the impugned order, remanding the matter back to the Commissioner(Appeals) for a re-examination of the case in accordance with the Tribunal's earlier decision. The appeal filed by the Revenue was allowed by way of remand, emphasizing the need for a thorough review based on established legal principles.