2015 (10) TMI 127 - AT - Central Excise

Denial of refund claim - Unjust enrichment - Provisional assessment - Held that - Appellant discharged the duty liability on the basis of ACP provisionally fixed by the Commissioner of Central Excise as 5 MT. It was subsequently re-determined by the Tribunal as 4 MT instead of 5 MT. The refund claim of the excess duty, was rejected by the lower authorities on the ground of unjust-enrichment. The Larger Bench of the Tribunal in the case of Shivagrico Implements Limited (2006 (4) TMI 5 - CESTAT, NEW DELHI), held that the payment of duty erroneously under Section 3A of Central Excise Act, 1944 being in the nature of duty under Compounded Levy Scheme attracts the principles of unjust-enrichment. - Appellant should be given an opportunity to place this certificate before the adjudicating authority to establish that the duty was not passed on to the customers, in the interest of justice. - Appeal disposed of.

Summary

Issues:
1. Determination of production capacity for duty payment.
2. Application of unjust enrichment principle.
3. Interpretation of relevant case laws and circulars.
4. Consideration of Chartered Accountant certificate as evidence.

Analysis:

Issue 1: Determination of production capacity for duty payment
The appellants were involved in manufacturing MS Ingots and opted for duty payment under Section 3A of the Central Excise Act, 1944. Discrepancy arose when the Commissioner provisionally determined the Annual Capacity of Production (ACP) as 5 MT, which the appellants contested. The Tribunal later determined the production capacity as 4 MT. The appellant sought a refund based on this determination, which was initially credited to the Consumer Welfare Fund due to alleged failure to prove non-passing of duty incidence to customers.

Issue 2: Application of unjust enrichment principle
The appellant argued against the application of unjust enrichment, citing the payment of duty on a provisional basis during a specific period. The Tribunal referred to the decision in the case of Shivagrico Implements Limited, holding that erroneous duty payment under Section 3A attracts the principle of unjust enrichment. The appellant's reliance on other cases and circulars was considered, but the Tribunal found the decision in Shivagrico Implements Limited directly applicable to the present case.

Issue 3: Interpretation of relevant case laws and circulars
The Advocate for the appellant referenced various Tribunal decisions and a Board Circular to support the argument against unjust enrichment. However, the Tribunal distinguished the cited cases from the current scenario, emphasizing the specific nature of the duty payment and production circumstances in the appellant's case.

Issue 4: Consideration of Chartered Accountant certificate as evidence
The Tribunal acknowledged the Chartered Accountant certificate provided by the appellant to demonstrate non-passing of duty incidence to customers. While upholding the lower authorities' decision on merits, the Tribunal directed the adjudicating authority to review this certificate and any additional evidence to confirm the absence of unjust enrichment before finalizing the appeal outcome.

In conclusion, the Tribunal upheld the impugned orders on merits but allowed the appellant the opportunity to present further evidence to establish non-passing of duty incidence, ensuring compliance with the conditions of unjust enrichment.