2004 (11) TMI 218 - AT - Central Excise

Summary

Issues:
1. Recovery of erroneously refunded amount under Section 11A without recourse to Section 35E of the Central Excise Act.
2. Consideration of unjust enrichment when duty element has been passed on to customers.

Analysis:

Issue 1: Recovery of erroneously refunded amount under Section 11A without recourse to Section 35E of the Central Excise Act:
The appeals involved a dispute regarding the recovery of erroneously refunded duty amount without following Section 35E of the Central Excise Act. The appellants contended that the refund amount cannot be recovered under Section 11A without reviewing the order allowing the refund under Section 35E. They cited relevant tribunal decisions and a Bombay High Court case to support their argument. However, the Revenue argued that Section 11A is an independent substantive provision allowing recovery of erroneously refunded amounts without the need for appellate proceedings. The Revenue relied on a Bombay High Court decision upheld by the Supreme Court and a Tribunal decision to support their stance. The Tribunal, after considering the submissions, upheld the view that recovery of erroneously refunded amounts under Section 11A is valid without the necessity of first filing an appeal against the refund order. The Tribunal found no merit in the appeals on this issue and dismissed them.

Issue 2: Consideration of unjust enrichment when duty element has been passed on to customers:
The second issue revolved around the principle of unjust enrichment in cases where the duty incidence had been passed on to customers at the time of goods clearance. The Revenue argued that the principle of unjust enrichment applied in such cases, citing various decisions to support their position. The Tribunal concurred with the Revenue's argument, emphasizing that once duty incidence had been passed on to customers, the appellants were not entitled to a refund. The Tribunal referred to a Supreme Court decision upholding the bar of unjust enrichment in cases of duty paid under protest. By following relevant decisions, including a Larger Bench decision of the Tribunal, the Tribunal concluded that the appellants were not entitled to the refund, as they had passed on the duty incidence to customers. Therefore, the Tribunal upheld the order for recovery of the erroneously sanctioned refund amount. Consequently, the Tribunal dismissed all the appeals on this issue.

In conclusion, the Tribunal ruled in favor of the Revenue on both issues, upholding the recovery of erroneously refunded amounts under Section 11A and applying the principle of unjust enrichment when duty incidence had been passed on to customers.