2016 (8) TMI 445 - AT - Central Excise

Refund claim - Section 11B of Central Excise Act, 1944 - differential duty paid under protest - Duty recovered on molasses contained in the Ethyl Alcohol cleared during March 2005 to April 2005 at the rate of ₹ 1000/- PMT - Captive consumption of molasses - Held that - the Ld. Commissioner (Appeals) had initially remanded twice to the Assistant Commissioner and on third round allowed the appeal of the respondent giving a clear finding on the fact that the molasses so manufactured, on which the duty at the rate of ₹ 1000/- PMT paid was manufactured during the period December 2004 to February 2005. He also given the finding that there is no manufacturing of molasses from 1.3.2005 to 30.4.2005. From this finding, I do not find any force in the submission of the Revenue that on such production of molasses the duty is payable as per the revised rate of ₹ 1000/- PMT instead of ₹ 500/- PMT which was prevailing prior to 1.3.2005 therefore, I agree with the finding of the Ld. Commissioner and hold that the respondent have paid excess duty on the molasses used captively. Unjust enrichment - Held that - since the Commissioner (Appeals) given finding on the law point, no verification was done at any stage, on the facts that whether incidence of refund amount has been passed on to any other person or otherwise. As regard other Appeal No. E/1662/2010, it is found that this appeal was filed against the Commissioner (Appeals) order. Since the original order the Assistant Commissioner had sanctioned the refund implementing the earlier Order-in-Appeal dt. 27.2.2009, this appeal proceeding is consequential to the proceedings of appeal No.E/145/2009. Therefore I do no find it necessary to give a separate finding on the Appeal No. E/1662/2010. Both the impugned orders are set aside and the matters are remanded to the original adjudicating authority to verify the aspect of unjust enrichment and to pass a fresh order. - Appeals disposed of by way of remand

Summary

Issues:
Appeal against Order-in-Appeal, Duty on molasses, Refund claim rejection, Unjust enrichment, Captive consumption, Applicability of duty rate, Remand orders, Verification of unjust enrichment, De novo adjudication.

Detailed Analysis:

1. Duty on Molasses and Refund Claim Rejection: The case involves the appellant engaged in manufacturing Denatured Alcohol and Ethyl Alcohol from molasses. The duty rate on molasses was revised, leading to the recovery of differential duty on Ethyl Alcohol cleared during a specific period. The appellant filed a refund claim under Section 11B of the Central Excise Act, which was rejected multiple times. The Ld. Commissioner (Appeals) remanded the matter for fresh decisions, ultimately allowing the appeal of the respondent based on the timing of molasses production and clearance.

2. Unjust Enrichment and Captive Consumption: The issue of unjust enrichment arose, with the Ld. Commissioner (Appeals) finding that as the appellant cleared molasses to themselves for captive consumption, passing on the burden did not occur. However, the Revenue contended that unjust enrichment should apply regardless, citing a Supreme Court decision. The respondent argued that since duty was paid on captively consumed molasses, no passing on of duty incidence occurred.

3. Applicability of Duty Rate and Remand Orders: The Ld. Commissioner found that the duty was paid on molasses manufactured before the rate revision, thus excess duty was paid. Despite the contention that the revised rate should apply, the Ld. Commissioner disagreed. The case involved multiple remand orders, with the final decision favoring the respondent due to the timing of molasses production and absence of manufacturing during a specific period.

4. Verification and De Novo Adjudication: The Tribunal set aside the impugned orders and remanded the matters for verification of unjust enrichment. It was noted that no verification had been conducted to determine if the refund amount incidence was passed on to others. The adjudicating authority was directed to conduct de novo adjudication within three months, allowing the respondent an opportunity for submission and a personal hearing.

In conclusion, the judgment addressed various issues related to duty rates, refund claims, unjust enrichment, and captive consumption, emphasizing the need for proper verification and de novo adjudication in light of the specific circumstances of the case.