2016 (9) TMI 224 - AT - Central Excise

Refund - unjust enrichment - Whether the revenue is justified in refusing refund for the period September 2000 to February 2001 on the ground of unjust enrichment or not, when the amount of duty paid by the appellant under protest, during pendency of the appeal before the Honourable Supreme Court, when the issue was sub-judice and admittedly no duty was collected from the buyer of the products - Held that - the Id. Commissioner have misconceived the concept of unjust enrichment and failed to understand the provisions of Central Excise as well the basic principles of accounting. The appellant have not raised any supplementary invoice for the Dabur Lal Tail cleared during the period September 2000 to February 2001, so, there can be no question of passing of duty on the buyer. Secondly no duty can be passed on to the same buyer for an earlier clearance of some different product, by clearance of some different product in the future time. Further the appellant have deposited the amounts by TR-6 Challans and debited the duty during pendency of their appeal before Honourable Supreme Court, by way of debit entry made in the PLA (Personal Ledger Account). Accordingly there is no question of unjust enrichment involved under the facts and circumstances of the case. Therefore, I direct the Adjudicating Authority to disburse the refund of ₹ 1,86,40,263 within a period of 30 days from the date of receipt of this order along with interest, from 3 months after the date of application for refund, being 3/5/05. - Decided in favour of appellant with consequential benefits

Summary

Issues:
1. Whether the manufacturer assessee is entitled to a refund of duty paid during the pendency of an appeal before the Supreme Court.
2. Whether the principle of unjust enrichment applies to the refund claim.
3. Whether the rejection of the refund claim by the Commissioner (Appeals) was justified.

Analysis:

Issue 1:
The manufacturer assessee filed appeals regarding the classification of 'Lal Tail' under the Central Excise Tariff Act. The Supreme Court decided in favor of the assessee, setting aside the Tribunal's order and allowing the appeal. The assessee then sought a refund of the duty deposited 'under protest' during the appeal. The adjudicating authority partially granted the refund, but a significant amount was directed to be credited to the Consumer Welfare Fund. The matter was remanded back to consider the issue of unjust enrichment. The Commissioner (Appeals) rejected the refund claim, leading to the appeal before the Tribunal.

Issue 2:
The Commissioner (Appeals) upheld the rejection of the refund claim based on unjust enrichment, stating that the duty had been passed on to the buyer. However, the Tribunal found that the concept of unjust enrichment was misconceived. It was noted that no supplementary invoice was raised for the product in question during the relevant period, eliminating the possibility of passing on the duty to the buyer. The Tribunal highlighted that the duty was deposited by the assessee during the appeal, and there was no question of unjust enrichment based on the facts and circumstances. Consequently, the appeals were allowed, and the Tribunal directed the refund to be disbursed with interest.

Issue 3:
The Tribunal found that the Commissioner had failed to understand the provisions of Central Excise and basic accounting principles. It was emphasized that the duty was paid by the assessee during the appeal process, and no duty was collected from the buyer. The Tribunal concluded that there was no unjust enrichment in this case and directed the refund to be processed promptly.

In summary, the Tribunal allowed the appeals, rejecting the notion of unjust enrichment and directing the refund of the duty paid during the pendency of the appeal, along with interest.