2006 (2) TMI 32 - AT - Central Excise

Central Excise Unjust enrichment Refund of input duties credit order passed after ten years

Summary

Issues:
1. Application of doctrine of unjust enrichment to refund claim under Notification No. 325/86-CE.
2. Interpretation of Section 11B(2)(c) of the Central Excise Act, 1944.
3. Applicability of legal precedents in determining unjust enrichment in refund claims.

Issue 1: Application of doctrine of unjust enrichment to refund claim under Notification No. 325/86-CE:

The respondent filed a refund claim under Notification No. 325/86-CE, which lowered excise duty on Aerated water. The Assistant Commissioner initially ordered the credit to the Consumer Welfare Fund, citing unjust enrichment as the amount claimed had already been passed on and collected from customers. The Commissioner (Appeals) set aside this order, directing the Assistant Commissioner to scrutinize and sanction the refund to the respondent. The Revenue contended that the refund would result in unjust enrichment as the duty had been collected from customers. However, the Commissioner (Appeals) held that the doctrine of unjust enrichment did not apply to duty paid on excisable goods used as inputs.

Issue 2: Interpretation of Section 11B(2)(c) of the Central Excise Act, 1944:

Section 11B(2)(c) states that the doctrine of unjust enrichment is not applicable to the refund of duty paid on excisable goods used as inputs. The Commissioner (Appeals) referred to this provision in his order, emphasizing that the duty claimed as refund was essentially a credit of excise duty paid on inputs for manufacturing Aerated Water. The Commissioner (Appeals) concluded that the provisions of Section 11B(2)(c) were squarely applicable in the case of the respondent's refund claim, and the refund could not be rejected or denied on the grounds of unjust enrichment.

Issue 3: Applicability of legal precedents in determining unjust enrichment in refund claims:

The appellant argued that the Supreme Court's decision and other case laws supported the contention that the refund claim should be rejected due to unjust enrichment. However, the Tribunal found that the case laws cited by the appellant, such as Commr. of Customs & Central Excise v. Dura Syntex Ltd., I.T.C. Ltd. v. Commr. of Central Excise, Patna, and Commr. of Central Excise, Kanpur v. Kanpur Plastipack Ltd., affirmed the application of Section 11B(2)(c) and the exception it carved out for cases involving credit of duty. The Tribunal upheld the Commissioner (Appeals)'s decision that the refund claim fell within the provisions of Section 11B(2)(c) and dismissed the appeal filed by the Revenue.

In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) that the refund claim was not subject to the doctrine of unjust enrichment as per Section 11B(2)(c) of the Central Excise Act, 1944. The legal precedents cited supported this interpretation, leading to the dismissal of the Revenue's appeal.