2005 (9) TMI 88 - SC - Central Excise

Refund - Unjust enrichment - Held that - There can be no dispute with the proposition that the law prevalent at the relevant time has to be applied. It is on this very principle that the refund has not been granted and question of grant of refund arose actually only after the decisions of the CEGAT. Till then there was a dispute as to the manner in which the benefit was to be worked out. By the time the claim for refund were taken up for consideration, Section 11-B had already been amended. It now provided that where the amounts had already been recovered from customers, no refund could be made - Decided against assessee.

Summary

Issues:
Claim for refund denied on grounds of unjust enrichment based on Notification No. 198/76-C.E., dated 16th June, 1976.

Analysis:
The appeal before the Supreme Court was against an order of the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) denying a refund to the Appellants on the basis of unjust enrichment. The Appellants claimed a refund for the period from 1976-1979, following a dispute with the Respondent regarding the calculation of benefits under Notification No. 198/76-C.E. CEGAT had initially ruled in favor of the Appellants, but the refund was not granted due to the incorporation of the doctrine of unjust enrichment in Section 11-B post-amendment. The Appellants were directed to credit the recovered amounts to a designated Fund. The Appellants argued that the law prevalent at the time of the claim should apply, citing the decision in M.R.F. Ltd. v. Collector of Central Excise, Madras. However, the Supreme Court emphasized the application of the law at the relevant time and upheld the denial of the refund based on the amended Section 11-B, which prohibited refunds where amounts had already been recovered from customers.

The Supreme Court held that the law prevailing at the time of the claim is crucial in determining the outcome of refund cases. The Court noted that the refund issue only arose post the CEGAT decisions, and by then, Section 11-B had been amended to include the doctrine of unjust enrichment. As a result, the Court found no grounds to interfere with the impugned judgment and dismissed the Civil Appeal. The decision reaffirmed the principle that refunds cannot be granted when amounts have already been recovered from customers, in line with the amended provisions of Section 11-B.