2017 (12) TMI 214 - AT - Central Excise

Refund claim - unjust enrichment - Section 11B of the Excise Act - Held that - Any claim filed for refund of Central Excise duty is to be processed and dealt with only in terms of Section 11B of the Central Excise Act 1944 - Only if it is established that the incidence of such duty has not been passed on, can the refund be paid in cash to the claimant - In the instant case there is no dispute that the duty has been paid in excess and that the refund is admissible on merit. However, on the question of unjust enrichment, there is dispute. In terms of the clear provisions of Section 11B, the refund cannot be paid to the appellant. An agreement to pass on the duty if refunded, cannot come to the aid to of the appellant - appeal dismissed - decided against appellant.

Summary

Issues:
- Admissibility of refund claims under Section 11B of the Excise Act
- Unjust enrichment in the context of duty payment and refund claims

Analysis:
The appeal in question pertains to a dispute regarding the admissibility of refund claims under Section 11B of the Excise Act and the concept of unjust enrichment. The case involved a job worker who had paid duty on processed fabrics at a higher value as demanded by the Department, which led to a series of litigations and refund claims. The matter was remanded back to the adjudicating authority to assess the admissibility of the refund claims based on the issue of unjust enrichment.

The appellant contended that the refund claims were not hit by unjust enrichment as the amounts were deposited under protest. Despite recovering the excess duty from the buyers, the appellant had agreements with them stipulating that if the issue was decided in their favor and the excess duty refunded, it would be passed back to the buyers after deducting legal expenses. The appellant argued that this arrangement did not lead to unjust enrichment as the buyers were entitled to the refund claim.

On the other hand, the Revenue argued that the appellant had charged full duty from the buyers and received the payments, citing a decision of the Madras High Court. The Revenue contended that the appellant failed to demonstrate that they had suffered the incidence of tax, and therefore, the refund should be rejected based on the principle of unjust enrichment.

After hearing both sides and examining the record, the Tribunal held that while the duty payment had been made under protest and recovered from the buyers, the contractual agreements with the buyers did not meet the requirements of Section 11B. The Tribunal concluded that the appellant had indeed passed on the incidence of the differential duty to the buyers, making them ineligible for the refund. Therefore, the impugned order was upheld, and the appeal was rejected on the grounds of unjust enrichment.

In summary, the Tribunal's decision centered on the application of Section 11B of the Excise Act and the determination of unjust enrichment in the context of duty payment and refund claims. The contractual agreements between the appellant and the buyers were deemed insufficient to negate the passing on of the duty incidence, leading to the rejection of the refund claims.