1998 (1) TMI 216 - AT - Central Excise

Issues Involved:

1. Refund claim of excise duty.
2. Application of the doctrine of unjust enrichment.
3. Interpretation of Section 11B of the Central Excise Act, 1944.
4. Retrospective application of amended provisions of Section 11B.
5. Compliance with Tribunal's order and delay in refund.

Issue-wise Detailed Analysis:

1. Refund Claim of Excise Duty:

The appellants challenged the Order-in-Appeal dated 20-12-1996, which rejected their refund claim of Rs. 4,97,101.01. The Assistant Commissioner had initially rejected the refund claim on the grounds that the appellants had passed on the incidence of duty to their customers, directing the amount to be credited to the Consumer Welfare Fund under Section 12C of the Central Excise Act. The refund related to excise duty paid under protest for equalized freight from 1-6-1972 to 15-3-1976. The Tribunal had allowed the appeal on 6-6-1989, directing the Department to expedite the refund. Despite this, the Department did not sanction the refund, invoking the amended Section 11B provisions, which the appellants contested.

2. Application of the Doctrine of Unjust Enrichment:

The Assistant Commissioner and the Commissioner (Appeals) applied the doctrine of unjust enrichment, relying on the Apex Court's judgment in Union of India v. Jain Spinners Limited, arguing that the refund amount should be credited to the Consumer Welfare Fund. The appellants argued that the doctrine should not apply as their refund claim was not pending when the amendment came into force and had been finally decided by the Tribunal in 1989.

3. Interpretation of Section 11B of the Central Excise Act, 1944:

Section 11B, as it stood before the 1991 amendment, allowed for refund without an application if ordered by an appellate authority. The amended Section 11B required an application within six months from the relevant date. The appellants contended that their case should be governed by the pre-amendment provisions since the Tribunal's order had become final before the amendment.

4. Retrospective Application of Amended Provisions of Section 11B:

The Apex Court in Mafatlal Industries Limited v. Union of India clarified that the amended Section 11B would apply to pending proceedings where refund claims had not been finally and unconditionally decided. The appellants argued that their refund claim, decided by the Tribunal in 1989, was not pending, and thus the amended provisions should not apply. The Department, however, contended that since the refund had not been effected, the claim was still pending as of the 1991 amendment.

5. Compliance with Tribunal's Order and Delay in Refund:

The Tribunal's order from 1989 directing the refund had not been appealed by the Department, making it final. The appellants argued that the administrative delay or refusal to execute the Tribunal's order did not constitute a pending proceeding. The Apex Court in Mafatlal Industries Limited supported this view, stating that refunds ordered by statutory authorities that had become final were not pending proceedings and thus not subject to the amended Section 11B provisions.

Conclusion:

The Tribunal found merit in the appellants' arguments, concluding that the administrative delay in executing the Tribunal's 1989 order did not make the refund claim a pending proceeding. The amended Section 11B provisions did not apply to their case, as the refund had been ordered by a statutory authority and had become final. Consequently, the impugned order was set aside, and the appeal was allowed with consequential benefits to the appellants.

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