2017 (11) TMI 1098 - AT - Central Excise

Refund of tax paid under dispute - denial on the ground of unjust enrichment - doctrine of merger - Held that - the grant of refund has been finalized by this Tribunal along with interest. Further, in Civil Misc. Writ Petition No. 479 of 1996 the Hon ble Allahabad High Court in the Petition of the assessee has been pleased to direct that the assessee is entitled to refund with 12% interest, being order dated 6th July, 2000. Against the said order Revenue had preferred Civil Appeal No. 1042 of 2001, which was dismissed by the Hon ble Supreme Court by its order dated 29/04/2003. Under such facts and circumstances, I hold that the subsequent show cause notice issued by the Department being SCN No. V/15/ADJ/Noida/BTCL/77/09/13926 dated 14/09/2009 is ab initio void and accordingly quashed. The impugned Order-in-Appeal is set aside, as the same is apparently hit by the principles of doctrine of merger and hierarchy of Courts. Appeal allowed - decided in favor of assessee.

Summary

Issues:
1. Refund claim under provisional assessment.
2. Unjust enrichment and appropriation of refund amount.
3. Adjustment of outstanding demands without hearing.
4. Applicability of doctrine of unjust enrichment.
5. Validity of subsequent show cause notice.
6. Adjustment of refund without notice to the appellant.

Analysis:
1. The case involved a dispute regarding the dutiability of a product leading to the appellant provisionally paying tax. The Commissioner (Appeals) later held the product non-dutiable, and the appellant sought a refund of the excess amount paid for the period between January 1990 to March 1991.

2. The initial refund claim was rejected due to unjust enrichment, but the Commissioner (Appeals) allowed the refund based on precedents regarding the non-applicability of unjust enrichment clause before June 1999. However, the refund was later appropriated towards outstanding demands, leading to further appeals and remands.

3. The Department appealed against the refund admissibility, but CESTAT upheld the Commissioner's decision. The Assistant Commissioner allowed the refund of interest but also appropriated it against pending demands, leading to the current appeal by the appellant against the adjustment without a hearing.

4. The Revenue argued that refund claims arising from appeals should be subject to the doctrine of unjust enrichment, citing relevant Supreme Court rulings. The Tribunal considered previous court orders and held that adjustments made without notice and hearing were prejudicial to the appellant.

5. The subsequent show cause notice issued by the Department was deemed void and quashed due to the principles of doctrine of merger and hierarchy of courts. The impugned Order-in-Appeal was set aside for similar reasons.

6. The Tribunal dismissed the Revenue's appeal, finding no merits, and allowed the appellant's appeal to the extent that adjustments made without proper notice and hearing were set aside. The case was remanded with directions to issue a fresh show cause notice, provide an opportunity for the appellant to reply and lead evidence, and ensure a fair decision-making process within a specified timeframe.