2015 (10) TMI 1946 - AT - Central Excise

Denial of refund claim - Refund of excess amount paid - Unjust enrichment - Held that - In earlier round of litigation, the Commissioner (Appeals) held that the excess amount paid by the respondent during the course of investigation under protest is not part of the show cause notice. Therefore, the amount retained by the Revenue is without any authority of law. Therefore the provisions of Section 11B of the Central Excise Act, 1944 is not applicable. The said finding has not been challenged by the Revenue and same has attained finality. The rejection of refund claim on the ground of unjust enrichment is not sustainable as provisions of Section 11B are not relevant to the facts of this case. Admittedly, the earlier order of the Commissioner (Appeals) dated 16-11-2004 has not been challenged by the department. Therefore, in this case, the excess amount retained by the revenue which was paid by the respondent during the course of investigation under protest is without any authority of law. Therefore, the provisions of Section 11B of the Central Excise Act, 1944 are not applicable. In these circumstances, bar of unjust enrichment is not applicable to the facts. - decided against Revenue.

Summary

Issues:
Refund claim based on excess amount paid during investigation under protest, rejection of refund claim by Adjudicating Authority, justification for refund by Commissioner (Appeals), challenge on grounds of unjust enrichment and lack of evidence, finality of earlier Commissioner (Appeals) order, applicability of Section 11B of the Central Excise Act, 1944.

Analysis:
The Revenue appealed against an order allowing refund of excess amount paid by the respondent during an investigation. The respondent reversed an amount under protest during the investigation, paid a sum in excess not covered by the show cause notice, and filed a refund claim rejected by the Adjudicating Authority. The Commissioner (Appeals) later allowed the refund claim, stating the excess amount was retained without legal authority. The Revenue challenged this, arguing lack of evidence on unjust enrichment and depreciation claims. The Commissioner (Appeals) found no infirmity in the order, as the excess amount was not part of the show cause notice and was retained unlawfully.

In the appeal, the Revenue contended that the respondent failed to prove unjust enrichment and provide details of depreciation claims, justifying the rejection of the refund claim. On the other hand, the respondent's counsel argued that the earlier Commissioner (Appeals) order supported the refund claim, as the excess amount was retained unlawfully. The Member (J) considered both arguments and found that the earlier order had not been challenged by the Revenue, making the excess amount retention without legal authority. Consequently, the provisions of Section 11B were deemed inapplicable, and the rejection of the refund claim on unjust enrichment grounds was unsustainable.

The Member (J) upheld the impugned order, emphasizing that the excess amount retained by the Revenue without legal authority did not fall under Section 11B of the Central Excise Act, 1944. As the earlier Commissioner (Appeals) order had not been challenged and had attained finality, the bar of unjust enrichment was deemed irrelevant. Consequently, the appeal by the Revenue was dismissed, and the cross objection was disposed of accordingly. The judgment highlighted the importance of legal authority in retaining excess amounts and the inapplicability of certain provisions in such cases.