2009 (6) TMI 530 - AT - Central Excise

Refund- Unjust enrichment- The relevant facts that arise for consideration are the respondents herein were charged with mis-classification of the product and the case was initiated against them. During the pendency of the classification of the said product, Crane brand Betel Nut Powder , the respondent had paid the duty under protest on the said products, cleared earlier. Consequent to the decision of the Hon ble Supreme Court in their favour, respondent filed an application for the refund of such amount. The said refund claim was rejected by the Adjudicating Authority on the ground of doctrine of unjust enrichment. Aggrieved by such an order, the respondent preferred an appeal before the learned Commissioner (Appeals). The learned Commissioner (Appeals) after narrating the facts and circumstances of the case came to the conclusion that the impugned order passed by the Adjudicating Authority in rejecting the refund claim of the respondent needs to be set aside and he did so. Revenue is aggrieved by such an order and is before the Tribunal. Held that- , we do not find any merits in the appeal filed by the Revenue. The impugned order is correct and legal and needs to be upheld and we do so. The appeal is rejected.

Summary

Issues:
Refund claim rejection based on doctrine of unjust enrichment.

Analysis:
The appeal was filed by the Revenue against the Order-in-Appeal regarding the mis-classification of "Crane brand Betel Nut Powder" by the respondents. The respondents paid duty under protest on the cleared products. Following a favorable decision by the Supreme Court, they applied for a refund, which was rejected by the Adjudicating Authority citing unjust enrichment. The Commissioner (Appeals) set aside the rejection order, leading to the Revenue's appeal before the Tribunal.

The Departmental Representative argued that the Adjudicating Authority rejected part of the refund claim, citing unjust enrichment due to the uniformity in prices before and after the dispute. The Counsel for the respondent contended that the duty was paid under protest for goods cleared during a specific period. They referred to a High Court judgment stating that if duty is paid post-clearance, unjust enrichment does not apply.

The Tribunal considered the submissions and records, focusing on the refund claim for the period in question. The respondents paid the duty 'under protest' post-clearance, as identified in detailed challans. Citing a High Court judgment, the Tribunal emphasized that the burden of proving non-passing of duty to the buyer is a question of fact. The High Court's decision supported the Tribunal's conclusion that the duty payment post-clearance negated the presumption of unjust enrichment. Therefore, the Tribunal upheld the impugned order and rejected the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the correctness and legality of the impugned order based on the doctrine of unjust enrichment.