2024 (1) TMI 882 - AT - Central Excise

Refund of amount paid under protest - Cenvat credit of service tax paid on product liability and recall insurance premium which was denied by revenue on the ground that the same are post removal services - principles of unjust enrichment - HELD THAT - As there is no dispute to the fact that amounts relating to cenvat credit availed were collected from the appellant before issuance of show cause notice and adjudication order, and it is available on record that appellant during audit objection resisted the demand of reversal of Cenvat credit and have debited the same under protest ; such recovery of amount before creation of liability was without authority of law and cannot be treated as tax but revenue deposit only. It is settled law that section 11B has no application to revenue deposit made during investigation. Reliance in this behalf is placed on the decision of M/s. Parle Agro Pvt Ltd 2021 (5) TMI 870 - CESTAT ALLAHABAD in which it is held that section 11B has no application to revenue deposit, and such deposits are required to be refunded with interest @ 12% from the date of deposit. The impugned order is set aside - Appeal allowed.

Summary

Issues involved:
The appeal challenges the rejection of a refund claim by the Commissioner (Appeals) GST & Central Excise, Rajkot, regarding the reversal of cenvat credit relating to premium paid on product liability and recall insurance. The main issue is the application of the principle of unjust enrichment to deposits made under protest during audit/investigation.

Summary:

1. Refund Claim Dispute:
The appellant contested the reversal of cenvat credit during audit objection and paid an amount under protest, which was later denied as a refund claim. The Assistant Commissioner and the Commissioner (Appeals) upheld the denial citing the test of unjust enrichment under section 11B (2) of the Act.

2. Principle of Unjust Enrichment:
The appellant argued that the principle of unjust enrichment should not apply to deposits made under protest during audit/investigation and that the refund with interest should be granted from the date of deposit. Legal counsel cited relevant decisions supporting this argument.

3. Tribunal's Findings:
The Tribunal noted that the refund claim pertained to Cenvat credit of service tax paid on product liability and recall insurance premium, which was previously allowed by the Tribunal in a final order. It was established that the amounts paid during audit objection were effectively a reversal of Cenvat credit and not duty on clearance of goods.

4. Legal Precedents:
Citing decisions such as Chambal Fertilizers & Chemicals Ltd and Advance Steel Tubes Ltd, the Tribunal held that amounts paid during investigation for past periods are not subject to the test of unjust enrichment. It was emphasized that recovery of amounts before the creation of liability was without authority of law and should be treated as revenue deposit, not tax.

5. Decision and Conclusion:
Based on the legal position and precedents discussed, the Tribunal set aside the impugned order and allowed the appeal with consequential relief as per law. The refund claim was upheld, and it was determined that the bar of unjust enrichment did not apply to the amounts paid under protest during investigation.

This judgment clarifies the application of the principle of unjust enrichment to refund claims and highlights the distinction between revenue deposits and tax liabilities, providing guidance for similar cases in the future.