2017 (2) TMI 714 - HC - Central Excise

Refund claim - excess duty paid - rejection on the ground of unjust enrichment - Held that - The Tribunal concluded that the doctrine of unjust enrichment can be invoked but that aspect was not elaborated further. Midway the Tribunal holds that there is substance in the Department s objection on the point of limitation and therefore concentrated its entire attention towards that point. In dealing with that also, in subparas (ii) to (d) of para 5, the Tribunal committed serious errors of law apparent on the face of the record. The Tribunal did not elaborate as to how, in this case, the question of limitation can be said to be a pure legal issue. Such a plea raises a mixed question of law and facts and it is only after the applicable facts attract a bar and those facts are admitted, but the issue raised is whether the interpretation of the legal provision bars the remedy, then, it could be, in a given case, said to be a pure legal issue. Ordinarily, however, it is a mixed question - We are unhappy at the manner in which the Tribunal has dealt with the Appeals. We do not think that we should conclude the issue on both points, namely, whether there is a period of limitation prescribed and at the relevant time which is attracted and that the doctrine of unjust enrichment can be invoked. Appeals restored to the file of the Tribunal for a decision afresh on merits - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Application of unjust enrichment in duty refund case.
2. Bar of limitation on refund claims.

Analysis:
1. The appeal challenged an order by the Customs, Excise & Service Tax Appellate Tribunal regarding the applicability of unjust enrichment in a case involving duty paid on yarn captively used. The appellants argued that the duty paid was available as credit of Modvat and thus not hit by unjust enrichment. They also questioned the Tribunal's decision on limitation starting from the finalization of provisional assessment. The High Court noted the facts of the case, where the appellants filed a refund application for alleged excess duty paid, leading to Show Cause Notices based on unjust enrichment grounds. The initial refund applications were rejected, appealed, remanded, and eventually granted by the Appellate Authority, but with a limitation objection upheld. The Tribunal then rejected the refund claims as barred by limitation, prompting the appellants to file for rectification of mistakes, which were also rejected.

2. The High Court criticized the Tribunal's cryptic order and lack of elaboration on the doctrine of unjust enrichment and limitation issues. It noted serious errors in the Tribunal's legal reasoning, particularly in determining whether the limitation issue was a pure legal question or a mixed question of law and facts. The Court expressed dissatisfaction with the Tribunal's handling of the case and decided to remand the appeals back to the Tribunal for a fresh decision on merits and in accordance with the law. The Court clarified that it had not expressed any opinion on the substantive legal issues and directed the Tribunal to decide the matters afresh without being influenced by earlier findings. The appeal was allowed, and no costs were awarded in the matter.