2009 (7) TMI 1141 - Commissioner - Central Excise

Summary

Issues Involved:
1. Applicability of the principle of unjust enrichment.
2. Legitimacy of the refund claim based on CESTAT's order.
3. Procedural fairness and adherence to principles of natural justice.
4. Consideration of evidence and prior case laws.

Detailed Analysis:

1. Applicability of the Principle of Unjust Enrichment:
The primary issue in this case revolves around whether the refund claim is hit by the principle of unjust enrichment. The Assistant Commissioner rejected the refund claim citing the Apex Court decision in Sahakari Khand Udyog Mandal Ltd. v. CCE, which mandates that the principle of unjust enrichment must be considered in all refund cases. However, the appellant argued that since the goods were exported, the principle of unjust enrichment does not apply as per Section 11B. The appellate authority agreed with the appellant, stating that the principle of unjust enrichment is of universal application but must be examined in the context of each case's facts. Here, since the goods were exported, the principle does not apply.

2. Legitimacy of the Refund Claim Based on CESTAT's Order:
The appellant's refund claim was based on a favorable order from the CESTAT, which set aside the Commissioner's order alleging clandestine removal of goods. The CESTAT found no evidence supporting the charge of clandestine removal and held that the goods were manufactured and exported by the EOU unit. The appellate authority noted that the refund arose because the appellant was made to deposit the amount during the investigation, and since the goods were exported, the refund should not be hit by unjust enrichment.

3. Procedural Fairness and Adherence to Principles of Natural Justice:
The appellant contended that the Assistant Commissioner was predetermined to reject the refund claim, evidenced by the unusually short seven-day period given to respond to the Show Cause Notice (SCN), contrary to the standard 30 days. The appellate authority found this to be against the principles of natural justice, reinforcing the appellant's argument that the proceedings were not conducted fairly.

4. Consideration of Evidence and Prior Case Laws:
The appellant presented several case laws to support their claim that the principle of unjust enrichment does not apply when goods are exported. These included decisions from Mahavir Aluminium Ltd., Gujarat State Fertilizers & Chemicals Ltd., Pricol Ltd., Mitesh Brothers, and Andor Powertron Ltd. The appellate authority reviewed these precedents and found them supportive of the appellant's position. Additionally, the Range Officer's report confirmed that the appellant had debited the duty amount to their own expenditure account, not to any customer's account, further negating the applicability of unjust enrichment.

Conclusion:
The appellate authority allowed the appeal, setting aside the Assistant Commissioner's order and granting the refund with consequential relief. The decision was based on the findings that the principle of unjust enrichment was not applicable since the goods were exported, the procedural fairness was compromised, and the evidence and case laws supported the appellant's claim.