2017 (4) TMI 547 - AT - Central Excise

Refund claim - unjust enrichment - case of respondent-assessee is that at the stage of payment of refund, which is already sanctioned, the issue of unjust enrichment is not applicable for the reason that the department had accepted the order of sanction of refund and no appeal was filed - Held that - every refund at the time of sanction has to pass through the check of unjust enrichment - However, in the present case, the sanctioning authority had already sanctioned the refund and since the amount was payable to the respondent the same was adjusted against some confirmed demand. If this is so, then it is not open for the department that for payment of refund any question of sanction of refund can be raised - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Appropriation of refund amount against government dues
2. Application of unjust enrichment principle in refund cases

Analysis:
1. The first issue in this case revolves around the appropriation of a refund amount against government dues. The respondent had filed a refund claim of &8377; 11,97,054/-, which was related to an earlier refund claim of &8377; 59,27,118/-. The larger refund claim was sanctioned, but a portion of it was appropriated due to pending government dues against the respondent related to an issue of classification. The issue of classification was later decided in favor of the respondent, leading to the amount of &8377; 11,97,054/- becoming payable to the respondent. The adjudicating authority initially credited this amount to the Consumer Welfare Fund on the grounds of unjust enrichment. However, the Commissioner (Appeals) allowed the respondent's appeal, leading to the revenue filing an appeal before the Tribunal.

2. The second issue involves the application of the unjust enrichment principle in refund cases. The revenue argued that unjust enrichment applied as per a Supreme Court judgment and cited cases to support their position. On the other hand, the respondent contended that the refund had already been sanctioned and adjusted against a confirmed demand, making the issue of unjust enrichment irrelevant at the payment stage. The Tribunal, after considering both sides' submissions, agreed with the respondent. The Tribunal held that since the refund had already been sanctioned and the amount was payable to the respondent, there was no need to revisit the unjust enrichment aspect at the payment stage. The Tribunal found no infirmity in the Commissioner (Appeals) order and upheld it, ultimately dismissing the revenue's appeal.