2008 (4) TMI 58 - AT - Central Excise

Appeal is against rejection of a claim for cash refund of interest sec. 11AB was applicable only to claim of refund of duty of excise interest paid subsequent to payment of differential duty has not been recovered by customers moreover nothing is contained in Section 11B to deny cash refund of the amount of interest paid by the party. In other words the refund claim in question is not hit by the bar of unjust enrichment refund allowed

Summary

Issues:
Claim for cash refund of interest under Section 11AB of the Central Excise Act, applicability of unjust enrichment doctrine to the refund claim.

Analysis:

The appeal before the Appellate Tribunal CESTAT, CHENNAI pertained to the rejection of a claim for cash refund of interest amounting to Rs. 29,614 under Section 11AB of the Central Excise Act. The refund claim arose from the payment, under protest, of interest on differential duty paid under supplementary invoices issued long after the goods were cleared on payment of duty under original invoices. The lower appellate authority held that the demand of interest on differential duty paid on supplementary invoices was not supported by law, making such interest refundable. However, the authority credited the interest amount to the Consumer Welfare Fund, citing the bar of unjust enrichment. The appellant challenged the crediting of the amount to the Fund, arguing against the applicability of unjust enrichment in this case.

The Tribunal noted that there was no appeal by the Revenue against the finding that interest paid on differential duty was refundable. The central issue was whether the bar of unjust enrichment applied to the claim for cash refund of interest. The appellant contended that unjust enrichment did not apply, stating they would provide detailed affidavits and reconciliation statements to demonstrate that interest on differential duty was not recovered from customers. Despite the Revenue's optimism due to the appellant not ruling out the doctrine's applicability, the Tribunal found that the doctrine of unjust enrichment did not apply to the refund claim since the interest amounts were paid under TR-6 challans after payment of differential duty, with no further invoices issued to customers for recovery.

Moreover, the Tribunal clarified that the refund claim was filed under Section 11B of the Central Excise Act, which was not applicable to interest on duty but only to duty of excise. Therefore, invoking Section 11B could not deny cash refund of the interest amount paid by the party. Consequently, the refund claim was not affected by the bar of unjust enrichment, leading to the appeal being allowed with consequential relief.

In conclusion, the Tribunal's decision favored the appellant by allowing the appeal and granting consequential relief, emphasizing that the claim for cash refund of interest on differential duty was not subject to the doctrine of unjust enrichment as per the legal provisions of the Central Excise Act.