2015 (10) TMI 1368 - AT - Central Excise

Denial of refund claim - duty was paid under protest on sizing of yarn - Captive consumption - appellant had not produced any evidence to establish that the incidence of duty has not been passed on directly or indirectly to any other person - Held that - Duty was paid on sizing of yarn and such sized yarn used in the manufacture of fabric which has been exported. The refund of duty either paid on the exported goods or on the material used in the manufacture of exported goods is covered under Rule 18 of Central Excise Rules, 2002 - From the clause (a) of first proviso to subsection (2) of Section 11B of Central Excise Act, 1944, it is clear that the provision of unjust enrichment is not applicable in respect of rebate of duty of excise paid on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India. Duty paid in respect of sized yarn which has been used in the manufacture of fabric and the said fabric was exported out of India, therefore duty so paid on sized yarn is clearly rebatable under Rule 18 and in accordance with clause (a) of first proviso to subsection (2) of Section 11B, the bar of unjust enrichment is not applicable. Therefore without going into the facts whether incidence of such duty has been passed on or otherwise refund of duty is admissible. In view of the above undisputed and unambiguous position in law, I set aside the impugned order. - Decided in favour of assessee.

Summary

Issues:
- Refund claim of duty paid on sizing of yarn
- Applicability of unjust enrichment
- Interpretation of Rule 18 of Central Excise Rules, 2002
- Interpretation of Section 11B of Central Excise Act, 1944

Analysis:
1. The appeal concerned a refund claim of duty paid on sizing of yarn by the appellant, engaged in the manufacture of various fabrics falling under specific chapters of CETA, 1985. The initial refund claim was rejected by the Asstt. Commissioner on the grounds of lack of evidence that the duty incidence was not passed on to any other person. The appellant appealed this decision through various stages, ultimately reaching the CESTAT, Mumbai, which remanded the case back to the Adjudicating Authority for further consideration based on new evidence presented.

2. The appellant's counsel argued that since the duty was paid under protest, the bar of unjust enrichment should not apply. They contended that the duty paid on sizing of yarn, used in manufacturing fabric for export, should be refunded as per Rule 18, irrespective of whether the duty incidence was passed on to others. The counsel emphasized that the provisions of unjust enrichment do not apply to duty paid on exported goods or materials used in exported goods, making the refund admissible.

3. The Revenue, represented by the Asst. Commissioner, maintained that the appellant failed to prove that the duty incidence was not passed on to others, citing relevant judgments. They argued that the duty paid on sizing of yarn, not on the exported fabric, should be subject to unjust enrichment. The Revenue relied on specific cases to support their stance.

4. The Tribunal carefully examined the submissions and records. It noted that duty was paid on sizing of yarn used in manufacturing exported fabric, which falls under Rule 18 allowing rebate on both exported goods and materials used in their production. Referring to Section 11B of the Central Excise Act, the Tribunal highlighted that unjust enrichment does not apply to duty paid on materials used in manufacturing exported goods. Therefore, in this case, where duty was paid on sized yarn used in exported fabric, the bar of unjust enrichment did not apply. Consequently, the Tribunal set aside the previous order, allowing the appeal and granting any consequential relief as per the law.