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2017 (5) TMI 1446 - AT - Central ExciseUnjust enrichment - refund of interest paid for delayed payment of interest - Held that - prior to amendment to Rule 9B (5) of the CER 1944, the doctrine of unjust enrichment was not applicable to refund arising consequent to finalization of provisional assessment - The proviso to Rule 9B(5) was amended vide N/N. 45/99 dated 25.06.99 and since the refund claim in the instant case has arisen prior to 25.06.99, the bar of unjust enrichment will not be applicable - appeal allowed - decided in favor of appellant.
Issues:
1. Appeal against rejection of refund claim on the grounds of unjust enrichment. 2. Applicability of Section 11B of the Central Excise Act 1944 to refund claims. 3. Doctrine of unjust enrichment in cases of refund arising from finalization of provisional assessment. 4. Interpretation of Rule 9B(5) of the Central Excise Rules 1944. Issue 1: Appeal against rejection of refund claim on the grounds of unjust enrichment: The appellant, a manufacturer of re-rolled products of Iron/Steel, filed a refund claim for Central Excise duty paid under protest after a Final Order by CESTAT, Bangalore. The Order-in-Original sanctioned the refund but credited it to the Consumer Welfare Fund due to unjust enrichment. The Commissioner (Appeals) upheld this decision. The appellant contended that the duty paid should be considered a 'Deposit of duty' and not subject to Section 11B. Citing various authorities, the appellant argued against the application of the principles of unjust enrichment due to the provisional nature of the assessments. Issue 2: Applicability of Section 11B of the Central Excise Act 1944 to refund claims: The appellant argued that Section 11B does not apply to the refund of duty paid under Section 3A, relying on the decision in Hans Steel Rolling Mills. The appellant maintained that the duty paid pending finalization of provisional assessment should be treated as a deposit and exempt from Section 11B. The appellant cited multiple cases to support this argument and distinguish the present case from the principles of unjust enrichment. Issue 3: Doctrine of unjust enrichment in cases of refund arising from finalization of provisional assessment: The appellant contended that the doctrine of unjust enrichment should not apply as the duty was paid pending finalization of provisional assessment. Citing relevant judgments, the appellant argued against the application of unjust enrichment principles in the present case, emphasizing that the duty was paid under protest and not subject to the same considerations as regular payments. Issue 4: Interpretation of Rule 9B(5) of the Central Excise Rules 1944: The Tribunal referred to the decision of the Karnataka High Court in the case of Commissioner Vs. ITC Ltd., affirmed by the Supreme Court, which held that refund paid after finalization of provisional assessment is not governed by Section 11B. The Tribunal noted that prior to the amendment to Rule 9B(5), the doctrine of unjust enrichment did not apply to refunds from finalization of provisional assessments. Relying on this precedent, the Tribunal allowed the appeal and set aside the impugned order, providing consequential relief to the appellant. In conclusion, the Tribunal allowed the appeal, setting aside the order that credited the refund to the Consumer Welfare Fund on the grounds of unjust enrichment. The decision was based on the interpretation of relevant legal provisions and precedents, emphasizing the distinction between refunds arising from finalization of provisional assessments and the applicability of Section 11B and the doctrine of unjust enrichment.
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