2017 (3) TMI 465 - HC - Central Excise

Refund claim - unjust enrichment - Whether the Tribunal was justified in holding that irrespective of the purpose for which the duty has been granted under N/N. 132/82-CE dated 21.04.1982 in respect of the excess production of sugar during the lean period from May 1982 to September 1982, refund on account of the exemption of notification would be subject to the principle of unjust enrichment? Held that - the assessee appellant has passed on the liability of central excise duty to the purchasers - In view of the admitted position of fact and the clear position in law that the manufacturer cannot be entitled to claim refund of duty that has not been borne by him or has been passed on to the purchaser, we do not find any error in the findings recorded by the Tribunal - appeal dismissed - decided against assessee.

Summary

Issues:
1. Interpretation of the principle of unjust enrichment in the context of a Central Excise Appeal.
2. Application of relevant case law regarding refund claims and unjust enrichment.
3. Assessment of the claim for refund based on the exemption notification and the passing on of excise duty to purchasers.

Analysis:

Issue 1: Interpretation of the principle of unjust enrichment
The High Court addressed the issue of unjust enrichment in the context of a Central Excise Appeal. The appellant sought a refund based on an exemption notification, claiming that the duty had been granted as a concession. However, the Tribunal rejected the claim, applying the principle of unjust enrichment. The Tribunal held that since the appellant had charged and passed on the excise duty to the purchasers, they were not entitled to claim a refund of the amounts paid. The Court affirmed this decision, emphasizing that a manufacturer cannot claim a refund for duty passed on to purchasers.

Issue 2: Application of relevant case law
The Court referenced the case of Sahakari Khand Udyog Mandal Ltd. v. Commissioner of C. EX. & CUS., where the Supreme Court upheld the principle of unjust enrichment. The doctrine prevents inequitable enrichment at the expense of others and is based on quasi-contract or restitution. The Court highlighted that the manufacturer's right to claim a refund is restricted if the duty burden has been passed on to consumers. Additionally, the Court cited the case of Commissioner of Central Excise, Lucknow v. Kesar Enterprises Ltd., where the Apex Court denied a refund claim based on unjust enrichment, reiterating that such enrichment cannot be permitted.

Issue 3: Assessment of the claim for refund
The appellant admitted to passing on the excise duty to purchasers, as stated in the affidavit. This admission, coupled with the legal principle that a manufacturer cannot claim a refund for duty passed on to consumers, led the Court to dismiss the appeal. The Court emphasized that the doctrine of unjust enrichment is crucial in preventing one party from retaining a benefit at the expense of another. Consequently, the questions of law raised in the appeal were decided in favor of the revenue and against the assessee, resulting in the dismissal of the appeal without costs.