2015 (8) TMI 632 - HC - Central Excise

Denial of refund claim - Unjust enrichment - Provisional assessment - Held that - It was the duty of the tribunal as a last fact finding authority to have considered the backdrop in which the refund claim was made, the documents placed in support thereof, the arguments canvassed on facts before the Assistant Commissioner and the Commissioner (Appeals) and the relevant findings on factual aspect in their orders. None of this has been referred, leave alone considered. If it was duly of the Tribunal to have referred to it, dealt with the issue on facts and after noting the rival contentions, then, it has clearly failed to perform it. The failure of the Tribunal to perform this duty and mandated by law itself is a substantial question and which can be safely termed as one of law and arising from the Tribunal s order. - order passed by the Tribunal is quashed and set aside - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Application of the principle of unjust enrichment in a case involving provisional assessment and subsequent final assessment.
2. Failure of the Tribunal to consider relevant facts and legal submissions in the appeal.

Analysis:

1. Application of the principle of unjust enrichment:
The Tribunal was tasked with determining whether the principle of unjust enrichment applied in a scenario where an assessment was initially provisional, and the duty liability was later finalized. The Tribunal referred to the amendment in Section 11B from August 1, 1998, which made unjust enrichment applicable to refund claims arising from final assessments. Citing the Supreme Court's decision in Commissioner of Central Excise Mumbai II v. Allied Photographics India Ltd., the Tribunal concluded that the principle of unjust enrichment was indeed applicable. However, the Tribunal failed to provide a finding on whether this principle could be applied in the specific circumstances of the case. The appellant contended that the Tribunal did not consider the allegations in the show-cause notice or the findings in the order-in-original. On the other hand, the respondent argued that the principle of unjust enrichment was correctly applied by the Tribunal, and the appeal did not raise any substantial legal questions.

2. Failure of the Tribunal to consider relevant facts and legal submissions:
The High Court noted that the Tribunal failed to adequately address the factual and legal aspects of the case. Despite the settled legal principle regarding unjust enrichment, the Tribunal did not analyze whether this principle applied to the specific facts of the case. The Court emphasized that the Tribunal's duty was to consider the background of the refund claim, supporting documents, arguments presented before the lower authorities, and their findings. By not fulfilling this obligation, the Tribunal neglected a crucial aspect of its role as a fact-finding authority. Consequently, the Court quashed the Tribunal's order, reinstated the Revenue's appeal for fresh consideration, and directed the Tribunal to thoroughly evaluate the findings of the lower authorities. The Court clarified that its decision did not imply agreement with the conclusions of the lower authorities, keeping all contentions open for further examination.

In conclusion, the High Court's judgment centered on the correct application of the principle of unjust enrichment in cases involving provisional and final assessments. It highlighted the Tribunal's failure to adequately consider the factual and legal aspects of the case, leading to the quashing of the Tribunal's order and a directive for fresh consideration.