1997 (7) TMI 325 - AT - Central Excise

Summary

Issues:
- Appeal against rejection of refund claims for excess duty paid.
- Application of the doctrine of unjust enrichment in cases of captive consumption.
- Interpretation of Constitutional Bench judgment on refund claims.

Analysis:
1. The case involved appeals against the rejection of refund claims for excess duty paid by the respondents. The claims were based on paying duty at a higher rate than required for the manufacture of a specific product. The Asstt. Commissioner rejected the claims citing unjust enrichment, as the duty paid was allegedly included in the selling price of the product. The Commissioner (Appeals) overturned this decision, relying on precedents from the Bombay and Madras High Courts, which held that unjust enrichment does not apply when imported goods are consumed or used in manufacturing without passing on the duty incidence.

2. The legal representative for the revenue referred to a Constitutional Bench judgment of the Supreme Court in the case of Mafatlal Industries Ltd. v. Union of India. The Supreme Court clarified that all refund claims, except where the duty provision is declared unconstitutional, must be processed according to the relevant refund provisions in force at the time. This judgment was cited to support the revenue's argument against the refund claims based on the doctrine of unjust enrichment.

3. The respondents' representative highlighted that the Supreme Court's judgment did not address the issue of captive consumption explicitly. They pointed out specific paragraphs in the judgment where the Court left the matter of captive consumption open. The Tribunal acknowledged this argument and noted that the Supreme Court had not provided guidance on captive consumption. Consequently, the Tribunal held that the law established by the Bombay and Madras High Courts in similar cases should be followed.

4. Considering the absence of Supreme Court guidance on captive consumption and the specific observations in the judgment, the Tribunal upheld the Commissioner (Appeals)'s decision to allow the refund claims. The Tribunal emphasized that in cases of captive consumption where the duty incidence cannot be passed on, the doctrine of unjust enrichment may not apply. Therefore, the appeals against the refund claim rejection were dismissed, affirming the decision of the Commissioner (Appeals) based on the principles established by the High Courts in similar cases.