2017 (12) TMI 8 - AT - Central Excise

Refund claim - quantitative discount offered by appellant to their purchasers of the goods - unjust enrichment - Held that - an identical issue was adjudged in the case of Sirpur Paper Mills 2017 (9) TMI 1490 - CESTAT HYDERABAD , where it was held that sanction of refund to respondents do not amount to unjust enrichment, cannot be sustained - appeal allowed - decided in favor of appellant.

Summary

Issues:
Revenue's appeal against rejection of refund claims based on unjust enrichment.

Analysis:
The Revenue filed three appeals against orders rejecting refund claims due to unjust enrichment. The respondent did not appear despite multiple adjournment requests. The issue revolved around a refund sought by the appellant for a quantitative discount offered to purchasers. The adjudicating authority rejected the refund on unjust enrichment grounds. However, the 1st Appellate Authority relied on a Tribunal judgment to sanction the refund. The learned A.R. argued that a similar issue was resolved in a previous case. The Tribunal examined whether the refund was impacted by unjust enrichment. The 1st Appellate Authority's decision was based on the Triveni Glass Ltd case, while the Tribunal referred to the Sirpur Paper Mills case for guidance.

The Tribunal highlighted the Dharmsai Morarji Chemicals case, where unjust enrichment was deemed inapplicable. The Tribunal noted that the High Court's judgment in Addison & Co. Ltd. was overturned by the Supreme Court. The Apex Court ruled that trade discounts should not be disallowed merely because they are not payable at the time of each invoice. It was clarified that if the persons benefiting from the excess excise duty cannot be identified, the amount would be utilized for consumer welfare. Consequently, the Tribunal set aside the orders that deemed the refund non-unjust enrichment and directed the refund amount to be credited to the Consumer Welfare Fund under the Central Excise Act, 1944.

Based on the precedent set by the Sirpur Paper Mills case, the Tribunal concluded that the impugned order should be set aside. It was decided that the refund amount not meeting the unjust enrichment criteria should be credited to the consumer welfare fund. The appeal was disposed of accordingly.