2000 (5) TMI 527 - AT - Central Excise

Summary

Issues:
1. Refund of duty on HDPE tapes/strips captively consumed in the manufacture of HDPE sacks.
2. Classification of HDPE tapes/strips and HDPE sacks under relevant chapters for duty payment.
3. Validity of refund claim under Notification No. 217/86.
4. Challenge by the Department regarding the refund orders.
5. Application of the principle of unjust enrichment on the refund claim.

Analysis:

1. The Appeals arose from an Order-in-Appeal allowing Revenue Appeals against refund claims of duty paid on HDPE tapes/strips captively consumed in manufacturing HDPE sacks. The Commissioner (Appeals) allowed the Revenue's appeals for recovery of the refund amount sanctioned by the Asstt. Commissioner, leading to the present Appeals.

2. The classification issue revolved around HDPE tapes/strips and HDPE sacks. The appellants contended that no duty was leviable on tapes/strips as they were captively consumed. The Tribunal had previously set aside lower authorities' orders, upholding the claim that no duty was payable on tapes/strips captively consumed. The classification of products under Chapter 39 was upheld, allowing exemption under Notification No. 217/86.

3. The appellants argued that the refund was admissible under Notification No. 217/86 as HDPE tapes/strips, consumed in manufacturing HDPE sacks, were wholly exempt from duty. They paid duty on tapes/strips under protest. The refund claim was supported by case law and Tribunal decisions on classification under Chapter 39.

4. The Department challenged the refund orders, contending that the Asstt. Commissioner's order was only for sacks and time-barred. The Commissioner (Appeals) allowed the Department's appeals, citing gaps in the adjudicating authority's reasoning.

5. The issue of unjust enrichment was raised concerning the refund claim. The Tribunal found merit in the appellants' case, noting that the Asst. Commissioner's order on classification and exemption had become final. The refund claim was not time-barred as duty was paid under protest and recorded in gate passes. However, the matter of unjust enrichment required reexamination in light of a recent Apex Court judgment.

In conclusion, the Appeals were allowed, remanding the matter to the original adjudicating authority for reexamination solely on the question of unjust enrichment in line with the Apex Court's judgment.