2019 (4) TMI 890 - AT - Central Excise

Refund of wrongly reversed CENVAT credit - inputs consumed in provision of job worker - unjust enrichment - Section 11B of the Central Excise Act - Held that - In the impugned order, the learned Commissioner(Appeals) has failed to consider the clause c of proviso to Section 11B(2) of the Central Excise Act, 1944 which provides an exception. As per clause c proviso to Section 11B(2) of the Act, if such refund of amount of duty paid on excisable goods used as input in accordance with rule made, or any notification made under this Act, the same has to be credited to the applicant instead of Consumer Welfare Fund - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Refund of wrongly reversed CENVAT credit due to unjust enrichment.

Analysis:
1. The appellant claimed a refund of duty paid on inputs used for job work goods, which they had initially reversed but later realized was not required as per the Cenvat Credit Rules, 2004. The Commissioner(Appeals) rejected the refund claim citing unjust enrichment principles under Section 11B of the Central Excise Act.

2. The appellant argued that as per Section 11B(2)(c) of the Act, the refund of duty paid on excisable goods used as inputs should not be hit by unjust enrichment. They relied on various decisions to support their claim, emphasizing that the Department did not rebut their Chartered Accountant certificate, which should be accepted as per legal precedents.

3. The Tribunal noted that the Commissioner(Appeals) failed to consider the exception provided in clause c of proviso to Section 11B(2) of the Act, which mandates crediting the refund to the applicant instead of the Consumer Welfare Fund in certain cases. Referring to past judgments, the Tribunal found that the bar of unjust enrichment would not apply in situations involving credit of duty, as established in cases like CCE, Kanpur v. Kanpur Plastipack Ltd.

4. By analyzing decisions such as K. G. Denim Ltd., the Tribunal concluded that the issue at hand had been settled in favor of the appellant. The Tribunal held that the impugned order was not sustainable in law and set it aside, allowing the appeal of the appellant with consequential relief, if any.

5. The Tribunal's decision was based on the established legal principles and interpretations of relevant provisions, ensuring that the appellant was entitled to the refund claimed without being subjected to unjust enrichment concerns. The judgment provided a clear and detailed analysis of the issues involved, supported by legal precedents and reasoned arguments from both sides.