2023 (9) TMI 513 - AT - Central Excise

Refund of amount pre-deposited as demand - question of unjust enrichment as envisaged under section 11B of CEA was not examined by the lower authorities - HELD THAT - Any amount which the respondent had deposited during investigation or at any time including at the time of filing the appeal was merely a deposit under section 35F and not duties of excise under section 11B. Revenue was obliged to refund the same under section 35F along with applicable interest under section 35FF and it had not done so. Therefore, the respondent applied for refund citing section 11B. Section 11B is irrelevant to this case including the provisions of unjust enrichment in it. The impugned order is correct and needs to be sustained - appeal is dismissed.

Summary

Issues Involved: Appeal against refund rejection u/s 35F/35FF & 11B, Question of unjust enrichment under section 11B.

Issue 1: Appeal against refund rejection u/s 35F/35FF:
The Revenue appealed against the rejection of the refund application for the pre-deposited amount of Rs. 1,53,49,688/- under section 35F/35FF. The Assistant Commissioner initially rejected the refund application on 5.9.2019. Subsequently, the respondent filed another refund application under section 11B seeking the refund of the same amount, which was sanctioned by the Assistant Commissioner. The Revenue contended that the Assistant Commissioner failed to examine the question of unjust enrichment, leading to the appeal against the refund sanctioning order.

Issue 2: Question of unjust enrichment under section 11B:
The crux of the matter revolved around the question of unjust enrichment as envisaged under section 11B of the Act. The Revenue argued that the lower authorities should have examined the aspect of unjust enrichment before sanctioning the refund. However, the Tribunal clarified that section 11B applies to the refund of excise duty paid, not to any amount deposited. It highlighted that the legal presumption under section 11B regarding the burden of duty passed on to customers applies only to duties of excise, not to deposits, fines, or penalties. The Tribunal emphasized that any amount deposited towards a demand, fine, or penalty is just a deposit and not duty, and if the demand is set aside, the deposited amount needs to be refunded.

In conclusion, the Tribunal upheld the impugned order, emphasizing that the refund application under section 11B was justified as the deposited amount was not considered as excise duty. The Tribunal clarified the distinction between duties of excise and deposits, reiterating that the principle of unjust enrichment does not apply to deposits.