2008 (12) TMI 182 - AT - Central Excise

Refund of pre-deposit Held that bar of unjust enrichment will apply to the case of pre-deposit also

Summary

Issues:
1. Refund claim for unjust enrichment on pre-deposit of duty.

Analysis:
The case involved a refund claim of Rs. 5,90,000, out of which Rs. 2,72,532.59 was credited to the Consumer Welfare Fund due to unjust enrichment. The Commissioner (Appeals) initially held that unjust enrichment does not apply in cases of pre-deposit made on the direction of the Court/Tribunal. However, the Tribunal, citing Supreme Court decisions, remanded the matter back to the Commissioner (Appeals) stating that unjust enrichment applies to pre-deposit cases as well.

In the subsequent proceedings, the Commissioner (Appeals) analyzed the aspect of unjust enrichment and found that the duty incidence had been passed on to customers based on the refund amount being treated as revenue expenditure in the profit and loss account. Consequently, the refund was credited to the Consumer Welfare Fund.

The appellant argued that unjust enrichment does not apply to pre-deposit amounts as per Supreme Court and Bombay High Court decisions, especially since the first Commissioner (Appeals) ruled in their favor. However, the Tribunal's order, which was based on Supreme Court decisions, was not challenged, making the appellant's plea unsustainable. The Tribunal had explicitly stated that unjust enrichment applies to pre-deposit cases, and since the appellant did not dispute the duty incidence passing on to customers, the appeal was rejected.

In conclusion, the Tribunal upheld the application of unjust enrichment to pre-deposit cases, emphasizing that the Commissioner (Appeals) could not deviate from the Tribunal's directive. The appellant's argument against unjust enrichment on pre-deposit was dismissed due to the Tribunal's unchallenged order and the clear indication of duty incidence passing on to customers.