2022 (8) TMI 102 - AT - Central Excise

Refund claim - Violation of principles of natural justice or not - absence of any proof regarding non-subsummation of the impugned amount by the party - invocation of time limitation under section 11B of Central Excise Act, 1944 - HELD THAT - There is no denial to the fact that the amount, the refund whereof has been filed way back in the year 2018 was the amount deposited in the year 2016 during an investigation about proposed duty demand for the clearances made by the appellant in the period 2009-2011. The question of passing of the burden of an amount 5 years prior the amount was deposited is not at all possible. There was no need for the Reviewing Authority to take altogether different ground that too the one which is apparently not sustainable. The issue regarding application of principles of unjust enrichment to refund of pre-deposit is no more res integra. There are also very many judgments of various Courts, which have also reiterated the same principles that in case any amount is deposited during the pendency of adjudication proceedings or investigation, the said amount would be in the nature of deposit under protest and, therefore, the principles of unjust enrichment would not apply. In view of the catena of decisions, available on this issue, this Court answers the substantial question of law against the Revenue and in favour of the assessee. Invocation of time bar of section 11 (B) of Central Excise Act, 1994 - HELD THAT - It is observed that amount, the refund whereof was claimed, is an amount which was deposited by the appellant during the stage of investigation when impugned demand was proposed. Once the said proposal has failed to attain finality i.e. when the duty demand has been set aside, the aforesaid was not the deposit with reference to duty but was deposit under protest. Since it is not the amount of duty Section 11 (B) of CEA, 1944 and the time bar therein cannot be invoked - thus, the entire amount of Rs.6,27,728/- is to be refunded to the appellant alongwith interest as already been ordered by Commissioner (Appeals) in order dated 16.07.2019. Otherwise also it is observed that the Reviewing Authority has not challenged the findings as far as the non-applicability of section 11 B of Central Excise Act, 1944 and the time bar therein is concerned. The Commissioner (Appeals) has allowed this appeal by way of remand in terms of section 35 A, Commissioner (Appeals) has the power, after making proper inquiry as may be necessary, pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or other appealed against. The provision is abundantly clear that no power of remand has been vested by the statute in Commissioner (Appeals). Seen from this aspect also the order of Commissioner (Appeals) is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Refund claim of Rs.6,27,728/- deposited during investigation.
2. Applicability of the unjust enrichment clause.
3. Invocation of Section 11B of the Central Excise Act, 1944.
4. Power of remand by Commissioner (Appeals).

Detailed Analysis:

1. Refund Claim of Rs.6,27,728/- Deposited During Investigation:
The appellants, engaged in the manufacture of plastic bottles, initially faced a Central Excise Duty demand of Rs.17,97,986/- for the period 2009-2011. After depositing Rs.6,27,728/- as a pre-deposit, the demand was set aside by the Tribunal on 20.11.2018, leading the appellants to file a refund claim for the same amount. The Original Adjudicating Authority sanctioned only Rs.1,79,799/- and rejected the remaining Rs.4,47,929/-. However, the Commissioner (Appeals) allowed the refund of the remaining amount along with interest, which was complied with by the Adjudicating Authority. Subsequently, the Principal Commissioner reviewed the order, invoking Section 12B of the Central Excise Act, 1944, questioning the unjust enrichment clause, leading to the Department's appeal and remand by the Commissioner (Appeals).

2. Applicability of the Unjust Enrichment Clause:
The appellant argued that the amount deposited during the investigation should be considered as under protest, and thus, the unjust enrichment clause should not apply. The Tribunal noted that the demand pertained to the period 2009-2011, with the deposit made in 2016, making it impossible for the burden of the amount to be passed on to customers. The Tribunal referenced multiple case laws, including CCE, Lucknow vs. Eveready Industries India Ltd. and CCE, Coimbatore vs. Pricol Ltd., which supported the view that amounts deposited during investigation are under protest and not subject to unjust enrichment.

3. Invocation of Section 11B of the Central Excise Act, 1944:
The Tribunal observed that the amount deposited during the investigation is not considered duty but a deposit under protest. Therefore, the time limit under Section 11B does not apply. This position was supported by precedents such as the Hon'ble High Court of Madras in CCE, Coimbatore vs. Pricol Ltd. and the Hon'ble High Court of Delhi in Team HR Services Pvt. Ltd. vs. Union of India. The Tribunal concluded that the entire amount of Rs.6,27,728/- should be refunded along with interest, as ordered by the Commissioner (Appeals) on 16.07.2019.

4. Power of Remand by Commissioner (Appeals):
The Tribunal noted that under Section 35A, the Commissioner (Appeals) does not have the statutory power to remand a case. The Commissioner (Appeals) can only confirm, modify, or annul the decision appealed against. Therefore, the order of remand by the Commissioner (Appeals) was deemed unsustainable.

Conclusion:
The Tribunal set aside the order under challenge, directing the Department to comply with the Order-in-Appeal dated 16.07.2019, refunding the entire amount of Rs.6,27,728/- along with interest within two months from the receipt of the order. The appeal was allowed, and the directions of the Commissioner (Appeals) were upheld.