2014 (3) TMI 41 - SC - Central Excise

Recovery of refund already allowed - duty under protest - Directions given by Central Excise & Gold (Control) Appellate Tribunal and High Court of Bombay to refund the amount along with interest - Captive consumption - Unjust enrichment - Held that - this case hardly involves any legal issue but we feel more concerned about the hard luck of the appellant, a manufacturer of PVC Coal Conveyor Belting made from imported Nylon Yarn. Apparently, there was no issue of captive consumption in the instant case and yet the appellant was directed to file an undertaking as stated hereinabove in the order. Being in need of money, the appellant filed an undertaking under protest, though, in our opinion, it was not necessary for the Deputy Collector, Central Excise and Customs, Aurangabad to ask for such an undertaking. Be that as it may, the said order was not challenged by anybody and therefore, it attained finality. Amount of duty paid by the appellant had never been passed over to the purchasers and the said fact has been duly recorded by the Deputy Collector, Central Excise and Customs, Aurangabad in his order dated 5th April, 1995. The said order has attained finality as nobody challenged the said order. An undertaking, though strictly not required to be given, was given by the appellant as demanded under the aforestated order dated 5th April, 1995 and ultimately the amount had been refunded to the appellant. In our opinion, there is no question of demanding the said amount again, especially when the facts which had been disputed by the Revenue before the Tribunal had already been admitted in the proceedings which had been initiated by the Deputy Collector, Central Excise and Customs, Aurangabad in his order dated 5th April, 1995 - Decided in favour of assessee with costs.

Summary

Issues:
1. Imposition of duty on import of Nylon Yarn.
2. Refund claim filed by the appellant.
3. Show cause notice on unjust enrichment.
4. Undertaking filed by the appellant.
5. Review of the order on the show cause notice.
6. Appeal against the Tribunal's order.

Imposition of duty on import of Nylon Yarn:
The case involved a dispute regarding the imposition of duty on the import of Nylon Yarn. The Central Excise & Gold (Control) Appellate Tribunal had earlier ruled in favor of the appellant, stating that the classification of the imported goods was correct. The appellant filed a refund claim for the duty paid under protest, which was supported by evidence of end use in manufacturing belting.

Refund claim filed by the appellant:
The appellant filed a refund claim for the duty paid under protest for the imported nylon yarn. The High Court directed the Revenue to make the refund payment, but a show cause notice was issued questioning unjust enrichment. The Deputy Collector, Central Excise and Customs, Aurangabad, after due consideration, concluded that the refund claim was admissible on merit and that the duty incidence had not been passed on to the buyers.

Show cause notice on unjust enrichment:
A show cause notice was issued to the appellant regarding unjust enrichment, alleging that the duty amount had been recovered from the buyers. The appellant provided evidence that the duty amount had not been collected from the buyers, who confirmed the same. The Deputy Collector's order supported the appellant's claim, stating that the duty had not been passed on to the purchasers.

Undertaking filed by the appellant:
The Deputy Collector sanctioned the refund claim with a condition that the appellant give an undertaking to repay if a specific Supreme Court judgment favored the Department. The appellant, under protest, filed the undertaking, even though it was deemed unnecessary. The order was not challenged and attained finality.

Review of the order on the show cause notice:
After a review, the appellant was again asked to repay the refunded amount. The Tribunal dismissed the appeal against this decision, leading to the appellant challenging the order in the Supreme Court.

Appeal against the Tribunal's order:
The Supreme Court quashed the Tribunal's order, emphasizing that the duty amount had not been passed on to the buyers. The Court criticized the Tribunal's findings, which contradicted the Deputy Collector's order. The Court awarded costs to the appellant, highlighting the hardship faced and ordering the respondent authority to pay the costs within three months.