2017 (9) TMI 702 - HC - Central Excise

Refund claim - unjust enrichment - Classification of goods - power driven pumps (Mono Block Pump Sets) - The assessee claimed these stators and rotors as parts of mono bloc pump sets which were exempted under Tariff Item 68 as per N/N. 73/68 - Revenue took a view that the rotors and stators are parts of motor failing under Tariff Item 30-D and should suffer duty before they were captively used in the manufacture of mono bloc pumps - Whether the Tribunal is right in ordering refund based on its earlier decision, when the question of refund is barred by limitation? - Held that - For the failure to record a finding specifically that the duty paid for the period beyond 1983 up to 28.02.1986 has been passed on to the others and, consequently, the claim would amount to unjust enrichment, on the part of both the adjudicating authority and the appellate authority, the Tribunal has arrived at the correct conclusion. The claim for refund is maintainable and the said claim is not barred by limitation, as was held by the Commissioner (Appeals) on 18.07.2005 has attained finality. So, the question of examining the claim for refund on merits does not arise now, once again. The only area of scrutiny is liable to be confined as to whether the actual refund to the assessee would amount to unjust enrichment. This question is not examined from the point of finding out as to whether duty burden is already passed on to the others or not. Surmises and conjectures are drawn by setting out that though Excise Duty is not shown separately in the bills or invoices, but, in the absence of supporting documents that the burden of duty has not been passed on to the others, the claim for refund is rejected. If the burden of Excise Duty is passed on to the others, it gets reflected in the Bills and invoices. That is a positive evidence. That was produced to show that no such burden is passed off. It is, thus, clear that far from finding out as to whether or not the duty burden has been passed on to the others, the adjudicating and appellate authority have gone about looking for negative evidence. Clearly, the very approach is wrong. Appeal dismissed - decided against Revenue.

Issues Involved:
1. Classification of stators and rotors under the Central Excise Act.
2. Entitlement to exemption under Tariff Item 68 as per Notification No.73/68.
3. Provisional assessment and refund of excise duty.
4. Application of the concept of unjust enrichment.
5. Limitation period for claiming refund.

Issue-wise Detailed Analysis:

1. Classification of stators and rotors under the Central Excise Act:
The appellant argued that stators and rotors, used in the manufacture of mono block pump sets, should be classified under Tariff Item 68 and be exempt from duty. The department contended that these items should fall under Tariff Item 30-D and be subject to duty. The Assistant Commissioner initially rejected the assessee's claim, classifying the items under TI-30D.

2. Entitlement to exemption under Tariff Item 68 as per Notification No.73/68:
The assessee claimed exemption for stators and rotors under Notification No.73/68. The department denied this exemption, resulting in the assessee paying duty under protest. The Supreme Court eventually upheld the assessee's classification under TI-68, confirming that the parts manufactured were integral to the end product, thus qualifying for exemption.

3. Provisional assessment and refund of excise duty:
The assessee claimed that the assessments were provisional, justifying their refund claim. However, the Assistant Commissioner rejected this, stating there was no provisional assessment ordered. The Commissioner (Appeals) later found that duty paid in lumpsums for the period from 01.11.1981 to 31.10.1983 was not hit by unjust enrichment, leading to a partial refund. For the subsequent period, the adjudicating authority rejected the refund, stating the assessments were not provisional and the duty burden had been passed on.

4. Application of the concept of unjust enrichment:
The Commissioner (Appeals) initially ruled that the refund for the period from 01.11.1981 to 31.10.1983 was not barred by unjust enrichment. For the period from 01.11.1983 to 28.02.1986, the adjudicating authority and appellate authority focused on whether the refund would result in unjust enrichment. They concluded that the duty burden had been passed on, rejecting the refund claim.

5. Limitation period for claiming refund:
The Commissioner (Appeals) held that the refund claim was not barred by limitation. This decision attained finality and was not contested further. The Tribunal upheld this, emphasizing that the only issue left was whether the refund would amount to unjust enrichment.

Conclusion:
The High Court dismissed the appeals, affirming the Tribunal's decision. It held that the refund claim was maintainable and not barred by limitation. The only issue to be examined was whether the refund would result in unjust enrichment, which was not properly addressed by the adjudicating and appellate authorities. Consequently, the High Court found no merit in the appeals, answering the questions raised accordingly.

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