2004 (1) TMI 113 - AT - Central Excise

Summary

Issues:
1. Applicability of the principle of unjust enrichment to a refund claim.
2. Determination of annual capacity of a stenter for duty payment.
3. Burden of proof on the party claiming a refund.

Analysis:
1. The appeal was filed by the Revenue against an order-in-appeal where the Commissioner (Appeals) ruled that the principle of unjust enrichment does not apply to the refund claim of the respondents. The case involved the processing of M.M. Fabric using a hot air stenter, with the annual capacity determined under the Compounded Levy Scheme. The respondents challenged the order adjusting the capacity of the stenter, which included the length of galleries. The Tribunal set aside the order, holding that the annual capacity should be determined without considering the length of galleries.

2. Following the Tribunal's decision, the respondents filed a refund claim for the duty paid under protest. The Adjudicating Authority allowed the refund but directed the amount to be deposited in the Consumer Welfare Fund due to the lack of proof that the duty burden was borne by the respondents. On appeal, the Commissioner (Appeals) overturned the decision and granted the refund. The Revenue contended that the principle of unjust enrichment applies to every refund, citing a Supreme Court case.

3. The key issue in the appeal was whether the principle of unjust enrichment applied to the case. The Tribunal found that the duty was paid by the respondents following the re-determination of the stenter's annual capacity, and there was no evidence that the duty amount was recovered from their customers. Since the duty was paid under protest and not passed on to customers, the Tribunal upheld the decision to grant the refund, dismissing the appeal filed by the Revenue. The judgment emphasized the lack of evidence of the duty being passed on to customers as a crucial factor in determining the applicability of the unjust enrichment principle to the refund claim.