2008 (3) TMI 102 - AT - Central Excise

Unjust enrichment need be examined only when the goods are cleared directly from the factory at higher duty to the buyers - In this case, when the goods were cleared from the depot to the buyers, the duty collected was less than the duty paid at the time of clearance from the factory - Hence it is not necessary in such cases for the appellants to establish unjust enrichment - appeal filed by the Revenue is dismissed

Summary

Issues:
- Appeal against order of Commissioner (Appeals) regarding refund of excess duty paid due to fluctuating depot prices.
- Admissibility of refund from the perspective of unjust enrichment.

Analysis:
1. Appeal against Commissioner (Appeals) Order:
The case involved an appeal by the Revenue against the order of the Commissioner (Appeals) regarding the refund of excess duty paid by the assessee due to fluctuating depot prices. The assessee, a company selling final products through their depot, faced situations where the depot prices varied, leading to differences in the duty paid at the time of clearance from the factory and the actual sale price from the depot. The original authority verified the payments and sanctioned a refund of the excess duty paid to the tune of Rs. 1,19,360/-. The Revenue challenged this refund on the grounds that it was allowed without considering unjust enrichment. However, the Commissioner (Appeals) upheld the refund, stating that as the duty collected from buyers at the depot was less than the duty paid at the time of factory clearance, there was no unjust enrichment involved. The appellate tribunal agreed with the Commissioner (Appeals) and dismissed the appeal filed by the Revenue.

2. Admissibility of Refund and Unjust Enrichment:
The key issue in the case was whether the refund of excess duty paid by the assessee was admissible considering the concept of unjust enrichment. The Commissioner (Appeals) found that in this particular scenario, where goods were cleared from the depot to buyers at a price lower than the duty paid at the time of factory clearance, unjust enrichment did not apply. The Commissioner reasoned that since the duty collected from buyers at the depot was less than the duty paid initially, there was no question of unjust enrichment. Therefore, in such cases where the duty collected is lower than the duty paid at the time of factory clearance, establishing unjust enrichment is not necessary. The tribunal concurred with this finding, emphasizing that unjust enrichment is relevant when goods are cleared directly from the factory at a higher duty to buyers, which was not the situation in this case. Hence, the tribunal upheld the decision of the Commissioner (Appeals) and dismissed the Revenue's appeal.

This judgment clarifies the application of the unjust enrichment principle in cases where duty paid at the time of factory clearance differs from the price at which goods are sold from the depot. It highlights that in situations where the duty collected from buyers at the depot is less than the duty paid initially, there is no unjust enrichment, and therefore, a refund may be admissible without further examination from the unjust enrichment perspective.