2019 (12) TMI 279 - AT - Central Excise

Refund of excess duty paid - price variation clause - goods were valued at 110% of the cost of production - refund was rejected on the ground of unjust enrichment - HELD THAT - The appellant had initially paid the Excise Duty on the estimated cost, which was determined to be more than the actual cost, and accordingly, the duty element on the excess cost alone was claimed as refund. The Supply Order clearly mandates that the tax, duty and other levies shall be borne by the Ministry of Defence, which in fact was initially borne by the appellant and later on recovered from the Ministry of Defence. The appellant which is engaged in the manufacture of rail coaches, established in 1952, is owned and operated by the Indian Railways and by virtue of this, it is a Government of India undertaking and as such, the ratio of the decision of the Hon'ble jurisdictional High Court in the case of M/s. Sescot Sheet Metal Works Ltd. Vs. CESTAT, Chennai 2015 (4) TMI 386 - MADRAS HIGH COURT can be applied to underline the fact that it cannot be said that the appellant was unjustly enriched and that thereby, the unjust enrichment attributed to the appellant has to necessarily fail. The material takeaway is that the mischief of unjust enrichment could not be attributed to the appellant and the reason given for denying the refund being unjust enrichment, must fail - refund is to be allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of refund of excess duty paid by the appellant.

Analysis:
1. The appellant, a manufacturer of Railway Coaches, claimed a refund for excess Excise Duty paid on ACCW coaches cleared for the Ministry of Defence. The Revenue rejected the refund claim citing unjust enrichment concerns.
2. The Orders-in-Appeal highlighted discrepancies between the value of the coaches and the actual cost, leading to the denial of the refund claim. The appellant argued that the Ministry of Defence would cover any cost differences, negating unjust enrichment.
3. The Adjudicating Authority acknowledged the provisional assessment request by the appellant but emphasized the excess payment of Excise Duty due to valuing goods at 110% of production cost.
4. The Supply Order and a subsequent letter revealed the Ministry of Defence's responsibility for taxes and duties, contradicting the unjust enrichment claim against the appellant.
5. Citing a High Court decision, the appellant's status as a Government undertaking exempted it from unjust enrichment accusations. A related Circular further supported this exemption, leading to the allowance of the appeals for refund.

This detailed analysis covers the issues involved in the legal judgment, addressing the denial of refund and the subsequent considerations leading to the allowance of the appeals.