2017 (4) TMI 939 - AT - Central Excise

Refund claim - unjust enrichment - denial on the ground that the amount deposited by them during the investigation is shown in their books of account as expenditure and not as receivable - Held that - Undisputedly, the amount has been deposited during the investigation proceedings. It is in the nature of a pre-deposit. The appellant has deposited the amount of ₹ 3,38,749/- during investigation only with an intention of reducing the burden in case the litigation goes against him. There are no specific instances raised showing the amount being passed on to others. Merely because it was shown as expenditure, the department cannot contend that pre-deposit made by appellant is hit by unjust enrichment - refund allowed - decided in favor of assessee.

Summary

Issues:
Appeal against rejection of refund claim.

Analysis:
1. The appellants, manufacturers of sponge iron, availed CENVAT credit on capital goods and inputs. A show cause notice alleged irregular credit of &8377; 29,69,276/- on boilers and water treatment plant for generating steam exempted from duty. Adjudicating authority dropped the demand but imposed a penalty. Commissioner (Appeals) remanded the matter regarding credit of &8377; 3,38,749/- on water treatment plant.

2. The appellant filed a refund claim for &8377; 3,38,749/- deposited during the investigation before the show cause notice. The refund was sanctioned, but the department appealed, arguing unjust enrichment as the amount was shown as expenditure in the appellant's books. Commissioner (Appeals) held the refund inadmissible due to unjust enrichment.

3. The adjudicating authority, as per remand order, held the appellants eligible for credit of &8377; 3,38,749/- on the water treatment plant. The appellant contended that the amount was a pre-deposit during investigation and not subject to unjust enrichment. Citing relevant case laws, the appellant argued that showing the amount as expenditure does not prove passing on the duty.

4. The Tribunal noted that the amount availed as credit on the water treatment plant was eligible. The pre-deposit during investigation was not shown to have been passed on to others. Merely being recorded as expenditure does not establish unjust enrichment. The Tribunal set aside the order rejecting the refund claim, allowing the appeal with consequential reliefs.

In conclusion, the Tribunal allowed the appeal against the rejection of the refund claim, emphasizing that the pre-deposit made during investigation was not subject to unjust enrichment. The Tribunal held that the amount availed as credit on the water treatment plant was eligible, as there was no evidence of passing on the duty to others. The appellant's intention to reduce burden in case of an adverse litigation outcome was considered, and the order rejecting the refund was overturned.