2006 (3) TMI 148 - SC - Central Excise

Rebate - Unjust enrichment - Held that - assessee would not be entitled to the refund of the excess duty paid as the assessee had passed on the burden of the duty charged to the consumers; that the assessee would not be entitled to claim any amount by way of refund as the same results in unjust enrichment which cannot be permitted. The point in dispute being squarely covered by a three-Judge Bench of this Court in Sahakari Khand Udyog s case (1999 (3) TMI 197 - CEGAT, MUMBAI), the order under appeal is set aside. The assessee would not be entitled to the refund of the excess amount of duty paid by it, in terms of the decision of this Court in Sahakari Khand Udyog Mandal Ltd. v. Commissioner of Central Excise & Customs, (2005 (3) TMI 116 - SUPREME COURT OF INDIA) - Decided in favour of Revenue.

Summary

Issues:
Conflict of views on rebate for manufacturers of sugar under different notifications - unjust enrichment vs. subsidy nature.

Analysis:
The judgment deals with appeals filed under Section 35L(b) of the Central Excise Act, 1944, challenging a Full Bench decision of the Customs, Excise & Gold (Control) Appellate Tribunal resolving conflicting views on the rebate for manufacturers of sugar. The conflict arose between the cases of Sahakari Khand Udyog v. C.C.E., Surat and National Co-operative Sugar Mills Ltd. v. C.C.E., Madurai. In the former case, it was held that the rebate falls under Section 11B of the Act and is subject to the principle of "unjust enrichment." However, in the latter case, it was determined that the incentive provided under a specific notification is a subsidy outside the scope of "unjust enrichment" and not covered by Section 11B.

The Full Bench of the Tribunal, concurring with the view in the National Co-operative Sugar Mills Ltd. case, overturned the decision in the Sahakari Khand Udyog case. Subsequently, an appeal was filed against the Sahakari Khand Udyog decision, which was addressed by a three-Judge Bench of the Supreme Court in Sahakari Khand Udyog Mandal Ltd. v. Commissioner of Central Excise & Customs. The Supreme Court upheld the Tribunal's decision that the assessee cannot claim a refund of excess duty paid as it would result in unjust enrichment by passing on the burden to consumers. The Supreme Court reiterated that the assessee is not entitled to any refund, as established in the Sahakari Khand Udyog Mandal Ltd. case, leading to the setting aside of the impugned order and allowing the appeals, with each party bearing their own costs.