2013 (3) TMI 210 - AT - Central Excise

Refund claim in respect of the quantum of excess production of sugar - Duty paid on the clearances of sugar at the full rate - whether this refund claim would be subject to the bar of unjust enrichment under Section 11B - exemption Notification No. 132/82-C.E., dated 21-4-1982 invoked - Refund claim pertains to the period from May, 1982 to September, 1982, since it had not been sanctioned till 19th Sept., 1991 - Held that - According to sub-section (3) of Section 11B notwithstanding anything contrary contained in any judgment, decree, order or direction or any court or any other provision or Rules no refund shall be made except as provided in sub-section (2). Sub-section (3) of Section 11B is a non-obstante clause whose provisions shall have overriding effect. According to the sub-section (2) of Section 11B, except for the exceptions (a) to (f) mentioned in the proviso to sub-section (2) of Section 11B, in all other cases, the duty amount refundable shall be credited to the Consumer Welfare Fund. Rebate in respect of excess production of sugar during lean season in terms of Notification No. 132/82-C.E. is not mentioned among the exceptions. Clause (d) of proviso to Section 11B(2) covers those cases when the incidence of duty paid by the manufacturer had not been passed on to any other person. Thus, for claiming the refund of excess duty paid, the assessee has to prove that the incidence of duty whose refund has been claimed has been borne by him and had not been passed on to any other person. In view of the non-obstante clause of sub-section (3) of Section 11B, all the refund claims made during the period w.e.f. 20-9-1991 would be subject to the principle of unjust enrichment. As decided in Sahkari Khand Udyog v. CCE reported in 2005 (2005 (3) TMI 116 - SUPREME COURT OF INDIA) with regard to the grant of rebate in respect of excess production of sugar in terms of the Notification No. 108/78-C.E. held that the same would be subject to the principle of unjust enrichment. In view of this judgment irrespective of the purpose for which the duty exemption had been granted under Notification No. 132/82-C.E. in respect of the excess production of sugar during the lean period from May, 1982 to September, 1982, the refund on account of this exemption notification would be subject to the principles of unjust enrichment. The impugned order is not correct. Revenue s appeal is allowed.

Summary

Issues:
Claim of rebate under Notification No. 132/82-C.E. for excess sugar production during a specific period. Application of the principle of unjust enrichment to the rebate claim. Interpretation of Section 11B of the Central Excise Act regarding refund claims. Applicability of previous tribunal decisions and Supreme Court judgments on similar matters.

Analysis:
The case involved a dispute regarding a rebate claim under Notification No. 132/82-C.E. for excess sugar production during a specific period. The appellant had filed a refund claim for the excess production of sugar during a particular period but faced rejection due to being time-barred. The issue at hand was whether the refund claim would be subject to the principle of unjust enrichment under Section 11B of the Central Excise Act. The Tribunal analyzed the provisions of Notification No. 132/82-C.E. and Section 11B, emphasizing that the refund claims post-20-9-1991 would be subject to the principle of unjust enrichment as per the non-obstante clause of sub-section (3) of Section 11B. The Tribunal referred to the Apex Court's decision in Sahkari Khand Udyog v. CCE, which held that the principle of unjust enrichment applied to rebate claims for excess sugar production. Consequently, the Tribunal set aside the previous order, allowing the Revenue's appeal.

The appellant contended that the principle of unjust enrichment did not apply to the rebate under Notification No. 132/82-C.E., arguing that the exemption notification aimed to provide duty rebate for sugar manufacturers during a lean production period. The appellant relied on the Tribunal's decision in Kesar Enterprises v. CCE, which held that the principle of unjust enrichment did not apply to rebate claims under this notification. However, the Tribunal emphasized that post-20-9-1991, all refund claims would be subject to the principle of unjust enrichment as per Section 11B. The Tribunal noted that the Apex Court's judgment in Sahkari Khand Udyog v. CCE established that the principle of unjust enrichment applied to rebate claims for excess sugar production. Therefore, the Tribunal concluded that the refund under Notification No. 132/82-C.E. would indeed be subject to the principles of unjust enrichment, overturning the previous order and allowing the Revenue's appeal.

The Tribunal considered the arguments presented by both sides, focusing on the application of the principle of unjust enrichment to the rebate claim under Notification No. 132/82-C.E. The appellant contended that the exemption notification aimed to benefit sugar manufacturers during a lean production period and, therefore, should not be subject to the principle of unjust enrichment. In contrast, the Revenue argued that the full duty amount had been recovered from customers, making the rebate subject to the bar of unjust enrichment under Section 11B. The Tribunal analyzed the legal provisions and precedent, ultimately determining that the refund claim for excess sugar production would be subject to the principle of unjust enrichment post-20-9-1991. Citing the Apex Court's judgment in Sahkari Khand Udyog v. CCE, the Tribunal concluded that the refund under Notification No. 132/82-C.E. would indeed be subject to the principle of unjust enrichment, thereby allowing the Revenue's appeal and setting aside the previous order.