1996 (3) TMI 295 - AT - Central Excise

Issues Involved:
1. Eligibility of refund claim under unamended Section 11B.
2. Applicability of amended Section 11B to pending refund claims.
3. Determination of whether the refund claim was pending or settled.
4. Impact of unjust enrichment on the refund claim.

Detailed Analysis:

1. Eligibility of Refund Claim under Unamended Section 11B:
The appellants filed a refund claim amounting to Rs. 9,71,172.19 on 21-9-1989, citing non-availment of exemption under Notification 82/88-C.E., dated 1-3-1988, which provided for a lower rate of duty during the relevant period. The Assistant Collector communicated on 30-5-1990 that the appellants were eligible for a refund of Rs. 8,16,277.29 and sought their concurrence. The appellants contended that this communication was a sanction order, settling the claim under the unamended Section 11B of the Central Excises & Salt Act, 1944, which did not consider unjust enrichment.

2. Applicability of Amended Section 11B to Pending Refund Claims:
The amended Section 11B, effective from 20-9-1991, introduced the concept of unjust enrichment and stipulated that no refund shall be made except as provided in sub-section (2). The appellants argued that since the refund claim was settled before the amendment, the amended provisions should not apply. However, the Tribunal noted that the amended Section 11B(3) explicitly states that it applies notwithstanding any judgment, decree, order, or direction of the Appellate Tribunal or any Court.

3. Determination of Whether the Refund Claim was Pending or Settled:
The Tribunal examined the letter dated 30-5-1990, which indicated that the appellant was eligible for Rs. 8,16,277.29 and required their concurrence to proceed. This letter was deemed an interim communication, not a final settlement. The Tribunal referenced a decision by the Hon'ble Madras High Court, which clarified that a refund claim remains pending until actual disbursement occurs, regardless of prior orders or communications. Therefore, the refund claim was still pending when the amended Section 11B came into force.

4. Impact of Unjust Enrichment on the Refund Claim:
The Tribunal concluded that the appellants had passed on the incidence of duty to their customers, invoking the doctrine of unjust enrichment under the amended Section 11B(2). Consequently, the refund amount was required to be credited to the Welfare Fund, as per the amended provisions. The Tribunal upheld the rejection of the refund claim by the lower authorities, stating that the appellants were not entitled to the refund due to the unjust enrichment clause.

Conclusion:
The Tribunal dismissed the appeal, affirming that the refund claim was pending and subject to the amended Section 11B, which necessitated crediting the refund amount to the Welfare Fund due to unjust enrichment. The decision emphasized that no refund could be granted contrary to the amended provisions, regardless of prior communications or orders.

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