2017 (10) TMI 266 - AT - Central Excise

Refund claim - unjust enrichment - duty was paid under protest - the appellants have returned the money to the customer through cheques - Held that - the ruling relied upon by the learned Commissioner (Appeals) of the Apex Court in case of Grasim Industries Ltd. 2011 (8) TMI 689 - SUPREME COURT OF INDIA is not applicable in the facts of the present case, as in Grasim case, the duty had not been paid under protest, as in this case. Secondly refund was claimed on 28th November, 1990 and subsequent to that, Grasim had issued credit notes on its another division or unit, to which they had cleared the goods. Subsequently on 07/08/1991 the refund claim was allowed vide Order-in-Original dated 22nd September, 1992. Under such facts and circumstances, the Apex Court was pleased to uphold the disallowance of refund. The transaction being between the two units of the same company. Such facts are not obtaining in the present appeal - the finding of the learned Commissioner (Appeals), as regards unjust enrichment is cryptic and nonspeaking, without there being an enquiry made by him - Order-in-Original restored.

Summary

Issues Involved:
1. Refund denial based on unjust enrichment.

Analysis:

Issue 1: Refund denial based on unjust enrichment
The appellant, a manufacturer of toilet soap, filed a refund claim for a specific amount, arising from a previous order. The Assistant Commissioner initially granted the refund, emphasizing that no stay order was obtained against the order giving relief. The jurisdictional Range Superintendent confirmed the payment made under protest and the timely filing of the refund claim. However, the issue of unjust enrichment arose as the excess duty paid was passed on to customers. The appellant assured customers of refund if a dispute was settled in their favor. Subsequently, the appellant remitted the additional duty amount to customers, nullifying the unjust enrichment aspect. The Assistant Commissioner concluded the appellant was eligible for the refund under the law.

Issue 1 Continued:
The Revenue appealed the Assistant Commissioner's decision, citing the passing of duty incidence to customers and reliance on a Supreme Court ruling. The Commissioner (Appeals) rejected the refund claim as time-barred and due to the passing on of duty incidence to customers. The Commissioner emphasized that the refund could only be granted if the duty incidence was not passed on. The Commissioner doubted the correlation of the refunded money to customers and raised concerns about the genuineness of the process. The Commissioner's decision was based on the Grasim Industries Ltd. case.

Issue 1 Continued:
The appellant argued that they had repaid the differential duty amount to customers and complied with unjust enrichment provisions. They highlighted the withdrawal of the Revenue's appeal against the previous order. The appellant referred to relevant case laws supporting their position. The Tribunal found the Grasim case inapplicable to the present situation, noting the payment made under protest and successful appeal outcome. The Tribunal set aside the Commissioner's decision, reinstating the refund granted by the Assistant Commissioner, and ruled in favor of the appellant.

This detailed analysis covers the issues and the comprehensive judgment delivered by the Appellate Tribunal CESTAT MUMBAI regarding the denial of a refund claim based on unjust enrichment.