2017 (3) TMI 237 - AT - Central Excise

Refund claim - unjust enrichment - rejection on the ground that the credit note has been issued after clearance of the goods - Held that - As M/s Swaraj Mazda Ltd. has not taken the credit of excess duty claimed as refund by the appellant and the same has been certified by the Range Superintendent, the appellant is entitled for refund claim and as they have passed the bar of unjust enrichment - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection on the ground of unjust enrichment.

Analysis:
The appellant, a job worker, cleared goods to a buyer paying excess duties, which were later found to be overpaid. The buyer issued debit notes to the appellant for the excess payment, and the appellant filed a refund claim. The claim was initially sanctioned but later rejected due to the credit note being issued after goods clearance. The appellant argued that the case falls under the precedent of M/s Addison & Co. Ltd., asserting entitlement to the refund as the bar of unjust enrichment had been passed. The department confirmed that the buyer did not take cenvat credit on the refund claimed by the appellant.

The respondent relied on the Dharmasi Morarji Chemical Co. Ltd. case, emphasizing the applicability of the bar of unjust enrichment post the decision in M/s Addison & Co. Ltd. by the Larger Bench of the Apex Court. The court considered both arguments and referred to the clear finding in the M/s Addison & Co. Ltd. case where the Assessee had returned the excess duty amount to buyers, leading to the rejection of the refund claim by the Deputy Commissioner. However, the Appellate Authority and the Tribunal allowed the appeal, confirming the entitlement to the refund as the Assessee had borne the burden of duty without passing it on to any other person.

Based on the certification that the buyer did not take credit for the excess duty claimed as a refund by the appellant, similar to the M/s Addison & Co. Ltd. case, the tribunal held the appellant entitled to the refund claim, passing the bar of unjust enrichment. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

This judgment highlights the crucial aspect of unjust enrichment in refund claims, emphasizing the need to establish that the burden of duty was not passed on to any other party to qualify for a refund. The decision draws on precedents to determine the entitlement to a refund claim based on the specific circumstances of the case and the verification of credit utilization by relevant parties involved.