2017 (7) TMI 843 - AT - Central Excise

Refund claim - unjust enrichment - whether the appellant herein is required to cross the hurdle of unjust enrichment in respect of refunds claimed by him of an amount wrongly debited i.e. 8% or 10% value of the goods cleared from the factory premises? - Held that - the appellants were required to pay an amount of ₹ 63,68,953/- along with interest of ₹ 50,352/-. They were eligible for refund of the same. As these amounts do not represent duty, the refund of the same need not be subjected to the procedure prescribe under Section 11B of the Central Excise Act. Time limitation - Held that - the question of time barred does not arise as the First Appellate Authority, has recorded clearly that amount @ 8% or 10%, are debited in January 2012, February 2012 and the issue was finalised by the First Appellate authority in the favour of the assessee vide an order dated 13.03.2013 and appellant filed refund claim on 27.03.2013 within the time prescribed the provisions - refund cannot be rejected on account of time bar. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant is required to cross the hurdle of unjust enrichment in refunds claimed for wrongly debited amounts of 8% or 10% value of goods cleared from the factory premises.

Analysis:
The appeals involved a common question of law regarding unjust enrichment in refund claims for amounts wrongly debited by the appellant. The appellant had paid duty amounts following Show Cause Notices but later obtained a favorable decision from the Commissioner (Appeals) stating no necessity to reverse the debited amounts. Subsequently, the appellant filed refund applications for the reversed amounts, which were rejected on the grounds of unjust enrichment.

The appellant's counsel cited a similar case before the Division Bench where the appellant had paid 8% or 10% under CENVAT Credit Rules and the High Court upheld the Tribunal's decision. The Departmental Representative argued that any refund from a higher jurisdictional forum must pass the unjust enrichment test, referring to the Supreme Court's ruling in the Mafatlal Industries case. Additionally, a time-bar issue was raised for one of the appeals, which was contested by the appellant.

After considering the arguments, the Member found that the facts were undisputed. Referring to the Tribunal's judgment in a similar case, it was established that the debited amounts under CENVAT Credit Rules were not considered as duty under Section 11B of the Central Excise Act. Therefore, the unjust enrichment principle did not apply, leading to the unsustainability of the rejection of refund claims.

Regarding the time-bar issue, the Member clarified that the refund claim was filed within the prescribed time after the final decision by the First Appellate Authority, contrary to the lower authorities' rejection on grounds of being time-barred. Consequently, the impugned orders were set aside, and the appeals were allowed with any consequential reliefs.

In conclusion, the judgment addressed the issue of unjust enrichment in refund claims for debited amounts, emphasizing the non-applicability of Section 11B of the Central Excise Act to such cases. The decision highlighted the importance of timely filing refund claims and upheld the appellant's right to seek refunds for the amounts in question.