1987 (3) TMI 368 - AT - Central Excise

Summary

Issues:
1. Interpretation of the term "industrial unit" for the purpose of exemption under Notification 199/75.
2. Consideration of Plant & Machinery investment for different items manufactured within the same complex.
3. Application of the doctrine of unjust enrichment in refund claims.

Issue 1: Interpretation of "industrial unit" for exemption:
The case involved a refund claim under Notification 199/75 for the Capital Investment on Plant & Machinery. The dispute arose regarding the interpretation of the term "industrial unit" for the exemption. The Appellate Collector had held that the term should be construed as the Plant & Machinery installed for the specific product for which the benefit was claimed. The Revenue, however, argued that it should encompass the entire unit or factory where such goods were manufactured. The Tribunal analyzed past decisions and held that an "industrial unit" must be a separate or isolable part concerned with the industry or a complex. The benefit of the notification should apply only to the Plant & Machinery used for the manufacture of the exempted goods, not considering other items manufactured within the same complex.

Issue 2: Consideration of Plant & Machinery for different items:
The Respondents had set up a factory with different units for manufacturing aluminium rods and wires/cables. The dispute centered on whether the investment in Plant & Machinery for both items should be clubbed for assessing eligibility for the exemption. The Tribunal referred to past judgments emphasizing the need to treat separate items as distinct units. It held that the value of Plant & Machinery for the manufacture of the specific exempted product alone should be considered for determining eligibility under Notification 199/75. The physical separation of manufacturing units and distinct licenses supported this interpretation.

Issue 3: Application of unjust enrichment doctrine:
The SDR argued that the doctrine of unjust enrichment should apply, preventing the refund claim since the duty had been collected from buyers. However, the Tribunal rejected this argument, citing previous decisions that deemed the doctrine inapplicable in similar cases. The Tribunal differentiated the present case from the cited Supreme Court case, stating that the doctrine did not apply to the facts at hand. Consequently, the Tribunal dismissed the appeal by the department, upholding the Respondents' eligibility for the refund claim under Notification 199/75.

This judgment clarifies the interpretation of the term "industrial unit" for exemption purposes, emphasizing the need to consider Plant & Machinery investment solely for the manufacture of the exempted product. It also highlights the importance of treating distinct manufacturing units separately and rejects the application of the unjust enrichment doctrine in this context.