2012 (8) TMI 78 - AT - Central Excise

Refund - import of Industrial Nylon Yarn - Revenue denied the benefit of Notification and respondent paid the higher rate of customs duty under protest - Tribunal set aside the demand and allowed the benefit of Notification - respondent filed refund claim Held that - Refund claim was filed as consequential relief in pursuance of the order passed by the Tribunal and the differential duty was paid under protest - no infirmity in the impugned order passed by the Commissioner (Appeals) whereby the refund is sanctioned - appellant failed to show that the burden of duty has not been passed on the Commissioner (Appeals) ordered the amount of refund to be credited in the Consumer Welfare Fund - no merit in the appeal filed by the Revenue and the same is dismissed.

Summary

Issues:
1. Appeal against the impugned order passed by the Commissioner (Appeals) denying the benefit of Notification 38/78-Cus.
2. Challenge of the order denying the benefit of Notification No. 38/78-Cus before the Tribunal.
3. Refund claim filed by the respondent after the Tribunal's order was sanctioned.
4. Show-cause notice issued for recovery of the erroneous refund.
5. Appeal against the order crediting the refund to the Consumer Welfare Fund due to unjust enrichment.

Analysis:
1. The appeal was filed by the Revenue against the order passed by the Commissioner (Appeals) denying the benefit of Notification 38/78-Cus. The respondents had imported Industrial Nylon Yarn for manufacturing conveyor belts and availed the concessional rate of duty. The Tribunal had earlier set aside the demand and allowed the benefit of the Notification. However, a show-cause notice was later issued for recovery of the refund. The Commissioner (Appeals) held that while the respondents were entitled to the refund, it was hit by unjust enrichment and ordered the amount to be credited to the Consumer Welfare Fund.

2. The Tribunal dismissed the appeal filed by the present respondent against the order crediting the refund to the Consumer Welfare Fund. The Revenue then filed a subsequent appeal arguing that the refund claim should have been rejected on the grounds of unjust enrichment instead of being sanctioned and credited to the Consumer Welfare Fund. The Commissioner (Appeals) had found that the burden of duty had been passed on, leading to the decision to credit the refund to the Consumer Welfare Fund.

3. The Tribunal, in its analysis, noted that the refund claim was filed as a consequential relief following its earlier order, and the duty was paid under protest. As the appellant failed to demonstrate that the burden of duty had not been passed on, the Commissioner (Appeals) was justified in ordering the refund to be credited to the Consumer Welfare Fund. Consequently, the Tribunal found no merit in the Revenue's appeal and dismissed the same.

This judgment highlights the importance of establishing unjust enrichment in refund claims and the burden of proof in demonstrating that the duty has not been passed on before claiming a refund. The decision underscores the principles of equitable distribution and the role of the Consumer Welfare Fund in such cases.