2018 (4) TMI 612 - AT - Central Excise

Refund claim - unjust enrichment - case of appellant is that Since the transaction is of job work and not of sale there is no question of passing of incidence of duty to the principal - whether the refund claim of appellant is hit by unjust enrichment or otherwise? - Held that - duty was deposited during investigation with reference to removal of goods manufactured by appellant on job work basis - the goods were undisputedly dutiable therefore payment made by the appellant is differential duty therefore it cannot be said that amount paid by the appellant is deposit and not the duty. The refund of duty paid in excess is subject to test of unjust enrichment as provided under Section 11B of Central Excise Act 1944 - unjust enrichment is very much applicable in the present case which the appellant could not prove that incidence of duty has not been passed on to any other person accordingly impugned order is sustainable. Appeal dismissed - decided against appellant.

Issues:
1. Determination of assessable value for excise duty on job work basis.
2. Justification of refund claim under unjust enrichment principle.
3. Applicability of various judgments on unjust enrichment in excise duty cases.

Issue 1: Determination of assessable value for excise duty on job work basis:
The appellant undertook processing of Gray Fabric on a job work basis for various customers and discharged excise duty based on a formula from a specific case law. However, after an investigation, the Revenue contended that the assessable value should be determined as per Rule 8 of the Central Excise Valuation Rules, 2000. The appellant deposited an amount during the investigation, which led to a show cause notice demanding excise duty. The adjudicating authority initially dropped the demand, but the Revenue issued another notice rejecting the refund claim on the grounds of unjust enrichment. The appellant's subsequent appeals and the Revenue's challenges led to a series of orders and counter-appeals, ultimately resulting in the matter being remanded for re-examination.

Issue 2: Justification of refund claim under unjust enrichment principle:
The appellant argued that the duty was deposited post-clearance of goods on a job work basis, asserting that the duty incidence had not been passed on to their principal. They contended that since the deposit was made under protest, unjust enrichment should not apply to the refund claim. The appellant cited various judgments to support their position. On the other hand, the Revenue maintained that the duty was paid after clearance, making it liable for refund under the unjust enrichment principle. The Tribunal, after considering both arguments and relevant judgments, held that the refund claim must undergo the test of unjust enrichment. It was noted that the appellant failed to prove that the duty incidence had not been transferred to another party, leading to the dismissal of the appeals.

Issue 3: Applicability of various judgments on unjust enrichment in excise duty cases:
Both parties relied on multiple judgments to support their respective positions on the application of unjust enrichment in excise duty cases. The appellant cited cases like Sandvik Asia Ltd. and Rocket Engg. Corporation Ltd., while the Revenue referred to judgments such as Parle International Ltd. and Woodcraft Products Ltd. The Tribunal, after analyzing the arguments and case laws presented, emphasized the need for all refunds to pass the test of unjust enrichment, as established by the Supreme Court in Sahakari Khand Udyog Mandi Ltd. The Tribunal upheld the impugned orders, emphasizing the applicability of unjust enrichment in the present case and dismissing the appeals.

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