2023 (6) TMI 2 - AT - Central Excise

Refund of pre-deposit - refund claim filed is sought to be rejected by application of the principles of unjust enrichment - H ELD THAT - It is settled principles of law that pre-deposit is excluded from the said principles as it is made against an order issued by the appellate authority under Section 35F of the central Excise Act, 1944. Tribunal has in the case of NATIONAL ORGANIC CHEMICAL INDUSTRIES LTD VERSUS COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI - 400001 2021 (6) TMI 713 - CESTAT MUMBAI held that that In view of the specific provision of Section 129E of Customs Act, 1962, as elaborated by us, and the several decisions cited supra, the position adopted in the impugned order that the original authority was, in discarding the claim of the appellant that the payment of differential duty was pre-deposit, is not incorrect cannot be affirmed by us as legal and proper. Further, in the case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE 1 COMMISSIONERATE VERSUS M/S SANDVIK ASIA LTD. 2015 (10) TMI 719 - BOMBAY HIGH COURT , Hon ble Bombay High Court has held that Tribunal was not concerned with the treatment given to the amount and as deposited in the Assessee's profit and loss account. It is immaterial and irrelevant for the Tribunal and equally for us as to what the Assessee terms this amount in his Books of Account. Even if it is shown on the 'expense side' that does not mean that the presumption that the burden has been passed to the consumer can be raised. The order seeking to deny refund of pre-deposit by applying the principles of unjust enrichment cannot be sustained - Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the refund claim for predeposit made by the Appellant, the application of the principles of unjust enrichment, and the finality of the order of the Commissioner (Appeals) in favor of the Appellant.

Issue 1: Refund claim for predeposit:
The Appellant filed a refund application for the predeposit made against an order-in-original, which was subsequently set aside in favor of the Appellant. However, a protective demand was issued, leading to the rejection of the refund claim by the original authority. The Commissioner (Appeals) upheld the decision based on the doctrine of unjust enrichment, citing relevant case laws.

Issue 1 Details:
The main issue was the admissibility of the refund claim, which was previously decided in a similar case. The Appellant challenged the decision based on the application of unjust enrichment principles to the predeposit made. The Tribunal referred to the case law and circulars to establish that predeposit is excluded from the doctrine of unjust enrichment due to its nature as a payment made against an appellate authority's order.

Issue 2: Application of unjust enrichment:
The Tribunal addressed the application of the principles of unjust enrichment to the refund claim of the predeposit made by the Appellant. Citing relevant case laws and circulars, the Tribunal established that predeposit is not subject to the doctrine of unjust enrichment, as it is made against an appellate authority's order under the Central Excise Act, 1944.

Issue 2 Details:
The Tribunal referred to specific cases such as National Organic Chemical Industries Ltd. and Sandvik Asia Ltd., where it was clarified that predeposit made as a condition for interim relief or stay does not fall under the purview of unjust enrichment. The Tribunal emphasized that the doctrine of unjust enrichment applies to cases where the amount is not paid as duty but as a predeposit pursuant to court orders.

Final Decision:
In light of the precedents and legal principles discussed, the Tribunal set aside the impugned order denying the refund claim for predeposit. The appeal was allowed, emphasizing that the principles of unjust enrichment do not apply to predeposits made against appellate authority orders. The Tribunal directed the competent authorities to ensure compliance with circulars for the disposal of the refund without delay.