2017 (11) TMI 556 - HC - Customs

Refund claim - unjust enrichment - retrospective effect of amendment or not? - Whether the provisions of unjust enrichment inserted in Rule 9(B)(5) of the Central Excise Rules, 1944 vide Notification No.45/99-CE(NT) dated 25.6.1999 could be invoked and applied retrospectively on transaction effected prior to the date of the issue of the Notification i.e. during the period April, 1997 to March, 1998? Held that - Revenue has tried to justify on the ground of unjust enrichment. He has relied on the decision of the Supreme Court which has been made retrospective effect and in our considered opinion, when the competent authority i.e. Superintendent, Central Excise Range-I has passed the order of refund, it will not be appropriate to adjudicate the same issue in a refund application preferred by the assessee, more particularly when he has specifically made a declaration and last time when the matter was argued, counsel for the appellant has specifically made the point that the tax which has been paid was part of the price which has been recovered. The Tribunal and all other authorities committed a serious error in refusing to refund the amount and after the order passed which was not challenged. Refund allowed - appeal allowed - decided in favor of assessee.

Summary

Issues:
Challenging Tribunal's dismissal of appeal; Interpretation of unjust enrichment provision retrospectively; Examination of duty levy and refund timing.

Analysis:
The appellant challenged the Tribunal's decision dismissing their appeal. The High Court framed substantial questions of law, including the retrospective application of unjust enrichment provisions and the timing of duty levy examination. The appellant sought a refund of excise duty based on final assessment orders for the period 1997-1998. The appellant emphasized that the duty refund claim arose from final assessments related to captive consumption of yarn, asserting that duty incidence was not passed on to buyers. They cited legal precedents to support their position on unjust enrichment. The authority, however, raised concerns about the burden of duty passing on to buyers of processed fabric, invoking the principle of unjust enrichment.

The Tribunal relied on the Hindustan Lever Ltd. case, upholding the application of unjust enrichment to reject the refund claims. The appellant cited the same case and a Supreme Court judgment in support of their argument. The respondent relied on different legal precedents to justify the application of unjust enrichment. The High Court, after hearing both parties, found that the authorities erred in denying the refund. The Court directed the authority to refund the amount as per the Superintendent's order. Consequently, both appeals were allowed, and the issues were resolved in favor of the assessee.