2014 (12) TMI 153 - AT - Central Excise

Denial of Refund claim - Bar of limitation - manufacture of sugar - free sale of sugar and levy sugar - rebate claim claiming that the excess production during the period from 1-5-1982 to September 1982 - Notification No. 132/82-C.E., dated 21-4-1982 issued under Rule 8(1) of Central Excise Rules, 1944 - Held that - As per the scheme of the notification, towards the end of the sugar season, the sugar manufacturer determined his excess production and submitted his rebate claim to the Jurisdictional Assistant Commissioner who was required to sanction 60% of the rebate claim on presentation of the rebate claim and balance 40% after pre-audit. This rebate was being given as credit entry in the PLA and this PLA credit could be used for payment of duty on the clearances of the sugar. In this case, the rebate claim had been presented in September 1982 and 60% of the amount was sanctioned in June 1983. Subsequently while considering the payment of balance amount, the Assistant Commissioner, after issue of show cause notice, rejected the rebate claim as time barred. One of such exception is the case where the incidence of duty whose refund is sought has been borne by the assessee claiming the refund. The rebate claim 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 in the proviso to Section 11B(2). In this case it is not in dispute that the appellant while claiming this rebate under the Notification No. 132/82-C.E. recovered duty at the normal rate from their customers and therefore in terms of the provisions of Section 11B, as the same stood at the time of sanctioning the rebate, they would not be eligible for the same unless they prove that they had borne the incidence of duty whose refund/rebate is being claimed by them. But in this case, it is not disputed that the incidence of duty whose refund is claimed has been passed on. In view of the non obstante provisions of sub-section (3) of Section 11B, all refund claims made during the period w.e.f. 20th September 1991 would be subject to the principle of unjust enrichment incorporated in sub-section (2) of Section 11B. no infirmity in the impugned order - Decided against the assessee.

Summary

Issues:
Claim for rebate on excess sugar production during a specific period under Notification No. 132/82-C.E. - Rejection of claim on the ground of unjust enrichment.

Analysis:
The appellant, a sugar mill, filed a rebate claim for excess sugar production during a specific period under Notification No. 132/82-C.E. The claim was initially sanctioned partially, but later rejected by the Assistant Commissioner as time-barred. The matter went through various levels of appeal, with the Tribunal remanding it back to the Assistant Commissioner for processing on merit. However, a subsequent show cause notice was issued, proposing rejection on the basis of unjust enrichment, as the appellant had collected excise duty from customers. The Commissioner (Appeals) upheld the rejection, citing the principle of unjust enrichment. The appellant contended that the exemption notification's purpose would be defeated if such claims were rejected based on unjust enrichment.

The appellant argued that the principle of unjust enrichment should not apply to rebate claims for excess sugar production during lean periods, as the rebate was provided as credit in the PLA for excise duty payment. They relied on Tribunal judgments supporting this view. The Department defended the rejection, citing an Apex Court judgment and a recent Tribunal decision that rebate claims for excess sugar production are subject to unjust enrichment. The Tribunal examined the matter, considering the provisions of Notification No. 132/82-C.E. and the Central Excise Act, particularly Section 11B.

Notification No. 132/82-C.E. allowed for duty exemption on excess sugar production, with rebate claims to be processed by the Assistant Commissioner. However, changes in the Central Excise Act required refund claims to be filed by the assessee, subject to Section 11B provisions. The Tribunal noted that the appellant had passed on the duty incidence to customers, making them ineligible for the rebate under Section 11B. The non obstante clause in sub-section (3) of Section 11B mandated adherence to the principle of unjust enrichment for refund claims made after September 20, 1991. The Tribunal referred to the Apex Court judgment, which held that similar rebate claims for excess sugar production were subject to unjust enrichment.

Conclusively, the Tribunal found no error in the impugned order rejecting the rebate claim based on unjust enrichment. The appeal was dismissed, affirming the rejection of the claim.

(Operative part of the order pronounced in the open court)