2014 (7) TMI 146 - AT - Central Excise

Denial of refund claim - Unjust enrichment - MRP based goods - claim of refund on the ground that, excess duty was paid due to clerical mistake while taking assessable value of physician sample - Held that - appellants are manufacturing and clearing the Pharmaceuticals goods i.e. Medicaments. It is undisputed that the duty liability on such medicaments is based upon the MRP of the said product less abatement, as per the notification. It is also seen undisputed that the appellant had not charged anything extra over and above MRP printed on the medicaments cleared by them, in respect of which they have claimed refund of interest of duty. Whether unjust enrichment will apply when products are sold under MRP. - Held that - It cannot be held so unless there is evidence on record to show that such products were sold in excess of the MRP printed thereon; in the absence of any such evidence, we are of the view that the order of the Adjudicating Authority in sanctioning the refund is correct and needs to be restored. - Decided in favour of assessee.

Summary

Issues:
Claim for refund due to clerical mistake in duty payment, application of doctrine of unjust enrichment, appeal against Order-in-Appeal, compliance with Section 11A of the Central Excise Act.

Analysis:
1. Claim for Refund: The appellant, a pharmaceutical manufacturer, filed a refund claim of &8377; 76,479 due to a clerical mistake in assessing duty on physician samples of Metapower. The Adjudicating Authority found that the appellant paid excess duty based on incorrect assessable values. The First Appellate Authority set aside the order citing unjust enrichment not being satisfied.

2. Doctrine of Unjust Enrichment: The Adjudicating Authority established that the appellant did not charge anything extra over the printed MRP on the medicaments. The First Appellate Authority's doubt on the documents produced was dismissed as the Adjudicating Authority's findings were undisputed. The hurdle of unjust enrichment was cleared, as confirmed by the Adjudicating Authority's factual position.

3. Compliance with Section 11A: The appellant argued that the revenue authorities cannot recover the refund without issuing a show cause notice as per Section 11A of the Central Excise Act. Citing a Supreme Court judgment, the appellant contended that without such notice, recovery of the granted refund is not permissible. The Tribunal concurred, referencing the Apex Court's decision and setting aside the impugned order, allowing the appeal.

In conclusion, the Tribunal upheld the appellant's claim for refund, rejecting the unjust enrichment argument and emphasizing the necessity of compliance with Section 11A before recovering erroneous refunds. The judgment highlighted the importance of proper assessment of duty and adherence to statutory provisions in excise matters, providing clarity on the legal principles governing such cases.