2022 (8) TMI 1099 - AT - Central Excise

Refund allowed but directed to be deposited in the Consumer Welfare Fund of India - failure to cross the bar of unjust-enrichment - HELD THAT - It is noticed that the ground of rejection of payment to the Appellant s account, as noted by the Commissioner (Appeals), is that Appellant had not produced any evidence, to show that the amount was shown in its Balance Sheet as receivable from government or anything similar to it despite the fact that he himself had reproduced paragraph 10 of the order passed by this Tribunal in the case of COMMR. OF CUS., BANGALORE VERSUS MOTOROLA INDIA PVT. LTD. 2006 (4) TMI 390 - CESTAT, BANGALORE wherein it was held that bar of unjust enrichment would not be applicable to the amount deposited during investigation, basing on which he had set aside the order of Adjudicating Authority that the limitation period prescribed for seeking of refund of tax will not be made applicable to the Appellant s case as it was an amount deposited and not discharged against tax liability. The findings of the Commissioner (Appeals) that unless the deposited amount is shown in the Profit Loss Account of the Appellant as amount receivable, doctrine of unjust enrichment would be established, is erroneous. The order passed by the Commissioner of Central Tax (Appeals-I), Pune is hereby modified to the extent that the refund amount sanctioned and directed to be deposited in the Consumer Welfare fund of India is to be refunded to the Appellant and not to the Welfare Fund - Appeal allowed.

Summary

Issues Involved:
Refund claim allowed but directed to be deposited in Consumer Welfare Fund due to unjust enrichment - Appeal challenging the decision.

Analysis:
1. Background of the Case:
The case involves a refund claim of Rs.10,78,311/- that was initially allowed by the Commissioner (Appeals) but directed to be deposited in the Consumer Welfare Fund of India on the grounds of unjust enrichment. The Appellant's manufacturing unit had paid excise duty on burning loss beyond the permissible limit, but a favorable order was obtained at the Tribunal level stating that the amount was not payable. The Appellant sought a refund, which was initially rejected by the Adjudicating Authority as time-barred and unjustly enriched.

2. Contentions and Arguments:
Both sides presented detailed arguments and referred to relevant case laws. The Appellant's counsel argued based on judgments stating that the bar of unjust enrichment would not be applicable when the amount had been deposited during the investigation after the clearance of excisable goods. On the other hand, the Authorized Representative relied on different judgments to support the reasoning of the order passed by the Commissioner (Appeals).

3. Judgment and Analysis:
The Tribunal analyzed the legal position and precedent laws on the issue at hand. It was observed that unless the deposited amount is shown in the Profit & Loss Account of the Appellant as receivable, the doctrine of unjust enrichment would be established. The Tribunal found the Commissioner (Appeals)'s reasoning erroneous and allowed the appeal. The order directing the refund amount to be deposited in the Consumer Welfare Fund was modified, and the Respondent-Department was directed to pay the refund amount with applicable interest to the Appellant within two months.

4. Conclusion:
The appeal was allowed, and the order passed by the Commissioner of Central Tax (Appeals-I) directing the refund amount to be deposited in the Consumer Welfare Fund was modified. The Respondent-Department was instructed to pay the refund amount to the Appellant along with applicable interest within a specified timeframe. The judgment clarified the application of the doctrine of unjust enrichment in the context of the case and emphasized the importance of proper documentation and accounting practices in establishing refund claims.