2024 (6) TMI 1174 - AT - Central Excise

Rejection of refund claim - unjust enrichment - rejection by holding that in respect of depot sales, the price indicated in the invoices were the transaction value and hit by the bar of unjust enrichment - HELD THAT - The first appellate authority has observed that for the year 2008 09, as against claim of ₹14,38,174/- the original authority had sanctioned ₹86,129/- and for the other year a refund of ₹6,96,147/- was allowed and the rejection of the balance claim was pertaining to the excess duty paid in the respect of depot sales. It is the case of the Revenue that though Rule 7 of CER, 2002 enabled a taxpayer to claim refund of any amount paid in excess during provisional assessment, but however, the same is not absolute but subject to the principles of unjust enrichment. The impugned order is set aside - appeal allowed.

Summary

Issues:
- Whether authorities were justified in rejecting the refund claims of the appellant for the reasons of unjust enrichment?

Analysis:
The appeals were filed against the common order of Commissioner, (Appeals), where the assessees, manufacturers of spring leaves/spring leaves assembly, had depots at various locations and resorted to provisional assessment for the years under dispute. The assessee claimed various abatements for sales made from their factory, leading to excess duty paid during the respective years. The original authority partially allowed the refund claims, but rejected the balance claim related to depot sales, citing unjust enrichment. The first appellate authority upheld this rejection, prompting the appeals. The main issue was whether the rejection of the refund claims was justified based on unjust enrichment principles.

The Tribunal considered the arguments presented by the appellant's Advocate and the Revenue's Authorized Representative. The Revenue contended that although Rule 7 of CER, 2002 allowed taxpayers to claim refunds for excess payments during provisional assessment, the principle of unjust enrichment applied. However, the Tribunal referred to a previous order of the same Bench where a similar issue was decided in favor of the taxpayer. The Tribunal highlighted that excess duty paid due to provisional assessments being finalized was refundable without the bar of unjust enrichment. The Tribunal emphasized that the ultimate duty liability for a relevant period should be determined in final assessment, and any excess payment should be refundable without unjust enrichment implications.

The Tribunal cited relevant portions from the previous order, emphasizing that excess duty paid is refundable without unjust enrichment applying. The Tribunal also referenced a judgment of the Hon'ble High Court of Karnataka, which supported the view that excess duty paid is refundable without the imposition of interest. Based on the consistent legal principles and precedents, the Tribunal set aside the impugned order, allowing the appeals and granting consequential benefits, if any, as per law. The Tribunal concluded that the rejection of the refund claims based on unjust enrichment was not justified, and the excess duty paid should be refunded to the appellant.