2018 (5) TMI 1664 - AT - Central Excise

Suo moto re-credit amount in PLA instead of claiming refund - whether the appellant taken suo moto credit in their PLA against cash payment towards the proforma credit? - unjust enrichment - Held that - It is the amount of proforma credit which otherwise duty paid by the appellant, it cannot be said it is a pre-deposit. For the reason that for filing appeal in the Supreme Court no need of any pre-deposit, therefore, the amount paid by the appellant cannot be considered as predeposit. In the absence of statutory provisions, a person cannot claim or retain undue benefit. In the present case the refund is governed by Section 11B, therefore, the provisions of unjust enrichment is clearly applicable. Even in the case of suo moto re-credit though in principle, the appellant is entitled but subject to test of unjust enrichment. In the interest of justice an opportunity can be given to the appellant to establish their case that incidence of duty has not been passed on to any other person - appeal allowed by way of remand.

Summary

Issues:
1. Appeal regarding suo moto re-credit amount in PLA after High Court order disallowance and subsequent Supreme Court decision.
2. Appeal concerning refund matter of the same amount taken as suo moto re-credit, focusing on unjust enrichment.

Analysis:
1. The first appeal (E/1402/2008) pertains to the appellant's suo moto re-credit in PLA after a High Court order disallowed their proforma credit, which was later allowed by the Supreme Court. The appellant argues that the cash payment made in compliance with the High Court order should be considered a pre-deposit, entitling them to suo moto re-credit without the need for a formal refund application. Citing various judgments, the appellant contends that the taking of credit in this manner is legally sound. The appellant emphasizes that unjust enrichment should not apply in the case of refunding pre-deposits. The Tribunal acknowledges the appellant's entitlement to the refund but stresses the need to examine the unjust enrichment aspect before granting it.

2. The second appeal (E/264/2009) concerns the refund of the same amount taken as suo moto re-credit, with a focus on the doctrine of unjust enrichment. The Revenue argues that any excise duty refund must adhere to Section 11B, which includes provisions for unjust enrichment. Citing relevant judgments, the Revenue asserts the applicability of unjust enrichment in the present case. The Tribunal agrees that the refund falls under Section 11B, making unjust enrichment applicable. However, it notes the appellant's persistent claim that unjust enrichment does not apply. To ensure justice, the Tribunal decides to remand both appeals to the adjudicating authority for further examination specifically on the unjust enrichment aspect.

In conclusion, the Tribunal allows both appeals to be remanded for a detailed assessment of whether the duty incidence has been passed on to any other party, emphasizing the importance of establishing unjust enrichment before granting the refund.