2017 (2) TMI 824 - AT - Central Excise

Refund claim - interest on refund - unjust enrichment - Held that - while dismissing the appeal of M/s Allied Photographic Ltd, it was held that the order, being of itself flawed, cannot confer a right of interest on the applicant for refund. The reasoning adopted is certainly within the scope of decision on appeal. However, it does not suffer from any infirmity even though the decision may be challenged. Interest - section 11BB of Central Excise Act, 1944 - Whether the notice, limited to the issue of unjust enrichment, could settle the issue of limitation is not relevant; the highest court in the land has held the claim to be ineligible and that ineligibility cannot be transformed into eligibility by the Assistant Commissioner. The conclusion is that such an order does not reinstate the claims of the appellant to be an eligible claim for refund. A tax collected without authority of law retains its sanctity until illegality of collection is decided upon by lawfully constituted authority and brought to fruition by sanction of the amount - Appellant has no vicarious standing to act on behalf of the Fund and for claiming that, as the Fund is not entitled to interest, the Central Government has to be deprived of such amount. The appellant is not entitled to refund and, with that, its claim on time value of that money does not exist. Appeal dismissed - decided against appellant.

Issues:
Challenge to dismissal of refund claim, unjust enrichment, entitlement to interest on refund, transfer of amount to Consumer Welfare Fund, eligibility for interest under section 11BB of Central Excise Act, 1944.

Challenge to Dismissal of Refund Claim:
The case involved a challenge by M/s Allied Photographic (I) Ltd against the dismissal of their refund claim by the Commissioner of Central Excise (Appeals), Mumbai Zone-II. The dispute originated from the valuation of photographic printing paper distributed by the appellant, leading to a demand of duty confirmed in 1974. The manufacturer filed refund claims for specific periods, which were initially rejected but later paid following legal proceedings. The appellant filed a claim for refund in 1997, which was initially transferred to the Consumer Welfare Fund due to unjust enrichment concerns. The original authority sanctioned the refund but denied interest, leading to subsequent appeals and legal proceedings.

Unjust Enrichment and Transfer to Consumer Welfare Fund:
The central issue revolved around the concept of unjust enrichment and the subsequent transfer of the refund amount to the Consumer Welfare Fund. The appellant contended that the transfer was improper, as upheld by the first appellate authority. However, the appellate authority deemed the original authority's order as void ab initio, leading to the dismissal of the appeal. The transfer to the Fund was challenged by the appellant, arguing that they were entitled to interest on the delayed refund. The Tribunal analyzed the legality of the transfer and the implications of unjust enrichment, ultimately upholding the dismissal of the appeal based on the original authority's flawed order.

Entitlement to Interest on Refund under Section 11BB:
The appellant claimed interest under section 11BB of the Central Excise Act, 1944, for the delayed refund amount. However, the Tribunal highlighted that the Hon'ble Supreme Court had deemed the appellant ineligible for the refund. The original authority's order, despite addressing the issue of unjust enrichment, did not reinstate the appellant's eligibility for the refund. Therefore, the Tribunal concluded that the appellant could not claim interest under section 11BB due to their ineligibility for the refund as determined by the Supreme Court.

Analysis of Section 11BB of Central Excise Act, 1944:
The Tribunal provided a detailed analysis of section 11BB, emphasizing that the entitlement to interest is contingent upon the sanction of the refund to the applicant. Since the Hon'ble Supreme Court had ruled the appellant ineligible for the refund, the conditions for invoking section 11BB were not met. The Tribunal further clarified that even if the transfer to the Fund was correct, the appellant had no standing to claim interest as they were not entitled to the refund. The Tribunal's interpretation of the provisions of section 11BB led to the dismissal of the appellant's claim for interest on the delayed refund amount.

Conclusion:
The Tribunal dismissed the appeal, ruling that the appellant was not entitled to interest on the refund amount due to their ineligibility for the refund as determined by the Hon'ble Supreme Court. The analysis of unjust enrichment, transfer to the Consumer Welfare Fund, and the provisions of section 11BB of the Central Excise Act, 1944 formed the basis for the Tribunal's decision, ultimately upholding the original authority's order and denying the appellant's claim for interest.

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