2000 (5) TMI 842 - AT - Central Excise

Summary

Issues:
1. Denial of refund claim based on non-observance of Chapter X procedure and unjust enrichment.

Analysis:
The appellants removed consignments of un-machined cast articles to their sister concern at Hyderabad after paying duty. They later realized that no duty was payable under Notification No. 217/85-C.E. and filed a refund claim. The claim was rejected citing non-observance of Chapter X procedure and unjust enrichment. The consultant argued that the failure to follow Chapter X procedure should not deny them the benefit of the law, referencing a Tribunal decision. He also contended that the sister unit at Hyderabad was not a separate customer, thus unjust enrichment did not apply.

The respondent argued that since the conditions of the notification were not met, the benefit should be denied. Regarding unjust enrichment, it was claimed that raising a debit note did not prove the duty amount was received from customers. The Tribunal acknowledged the appellants' entitlement to the notification benefit if Chapter X procedure had been followed. It was established that non-compliance with Chapter X was a procedural lapse, not substantive.

The Commissioner (Appeals) asserted that once duty was debited in the customer's account, it didn't matter if the customer paid, implying the duty incidence was passed. However, the Tribunal disagreed, stating that raising a demand alone did not prove receipt of duty. Noting the common balance sheet between the appellants' units, it was concluded that the duty element was not received from an independent customer. Thus, the appellants were entitled to the refund claim, as allowing it would not result in double enrichment. The appeal was allowed with consequential relief granted to the appellants.