2023 (1) TMI 249 - AT - Central Excise

Refund claim - rejection of refund claim of Rs.2,17,946/- on the ground of limitation - refund was sanctioned to the extent of Rs.8,32,383/- but was transferred to the a/c of Consumer Welfare Funds on the ground of non-production of evidence in order to establish that the incidence of duty has not been passed on to the buyers or otherwise - principles of natural justice. Rejection of refund claim of Rs.2,17,946/- on the ground of limitation - HELD THAT - According to the appellant they have filed the aforesaid refund claim on 29.6.2017 and in support of their submission they produced on record the speed post receipt also alongwith its tracking but the aforesaid claim of the appellant about filing of refund claim in the year 2017 has been rejected by the authorities below merely on the ground that while filing the 2nd refund claim they lodged the claim for an amount of Rs.10,50,329/- on 26.2.2018 (although the correct date is 25.2.2019) without mentioning therein the fact of filing the claim earlier also in the year 2017 for part of the amount of total refund claim and also on the ground that in one of the speed post the pin code has been wrongly mentioned as 421310 in place of 421301. I have gone through the From-R Application for consequential refund of amounts paid which was filed by the appellant on 25.2.2019 and can be termed as 2nd refund claim. In the said refund application it has specifically been mentioned in Ground (vi)(b) that they had already filed the refund application regarding dropping demand of Rs.1,21,898/- plus interest and penalty as well as appeal before the Commissioner (Appeals) against the confirmation of the demand for the balance amount. Not only that, in the prayer of the said Form-R refund application a specific submission has been made that earlier consequential refund application is still pending with the department . The rejection of the speed post on the ground of incorrect mentioning of pin code seems to be filmsy as the Track Order Status placed on record by the appellant in support of its submissions establishes the delivery/receipt of the aforesaid speed post on 30.6.2017 at 09.03 am at Dandekarwadi S.O. which is the address of the Range Officer, Central Excise, Kalyan on which the speed post was sent on 29.6.2017. Another copy of the said Refund claim was sent by speed post on the same day addressed to the Asstt. Dy. Commr., Central Excise, Kalyan, which as per the Track Order Status was also delivered/received at the said address on 30.6.2017 at 2.41 pm - the appellant has successfully established that they have filed the refund claim of the amount of Rs.2,17,946/- within limitation in the year 2017 itself and accordingly the said issue is decided in favour of the appellant. Refund was sanctioned to the extent of Rs.8,32,383/- but was transferred to the a/c of Consumer Welfare Funds on the ground of non-production of evidence in order to establish that the incidence of duty has not been passed on to the buyers or otherwise - HELD THAT - Both the authorities below rejected the plea of the appellant on the ground of unjust enrichment by invoking the provision of section 11B(2) Central Excise Act, 1944. But while invoking the aforesaid provision, the said authorities failed to take into consideration the proviso to Section 11B(2) ibid, despite the plea raised by the Appellant, which empowers the concerned Officer to pay the amount of excise duty and interest, if any paid on such duty, as may be determined, to the applicant, in the circumstances contemplated under clauses (a) to (f), instead of crediting the amount to the Fund. A bare perusal of this provision and particularly proviso to sub-section (2) would denote that instead of crediting the amount of refund to the fund, it can be paid to the applicant seeking refund, if such amount is relatable, inter alia, to refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made or any notification issued under this Act. In my opinion the issue herein is squarely covered by this proviso and therefore the appellant is entitled for refund of duty and interest on this ground also. Unjust enrichment - HELD THAT - There is certificate of the Chartered Accountant as well as the affidavit of the appellant specifically mentioning therein that the burden towards Cenvat credit, interest and penalty was never passed on to the consumers. The Chartered accountant has issued the certificate on the basis of books of accounts and the other related relevant documents produced before them. Merely because the certificate is not as per the liking of the authorities below, it cannot be brushed aside as no specific format of certificate has been prescribed by the statute. If the department proves anything contrary to the statement mentioned in the certificate then certainly they have a valid ground to discard it, but this is not the case anywhere.

Summary

Issues:
1. Rejection of refund claim amounting to Rs.10,50,329.
2. Rejection of refund claim of Rs.2,17,946 on the ground of limitation.
3. Transfer of the refunded amount to the Consumer Welfare Fund due to unjust enrichment.
4. Interpretation of the proviso to Section 11B(2) of the Central Excise Act, 1944 regarding refund entitlement.
5. Examination of the unjust enrichment principle and the sufficiency of evidence provided by the appellant.

Analysis:
1. The appeal challenged the rejection of a refund claim totaling Rs.10,50,329, consisting of Cenvat credit, interest, and penalty paid by the appellant during an investigation. The appellant contended that the refund was transferred to the Consumer Welfare Fund due to unjust enrichment principles. The Tribunal reviewed the history of the case, including visits by the Preventive Staff in 2007 and subsequent demands for reversal of Cenvat credit. The appellant filed refund claims, leading to a series of adjudications and appeals resulting in partial refunds and rejections based on limitations and unjust enrichment considerations.

2. The first issue addressed was the rejection of a refund claim of Rs.2,17,946 on grounds of limitation. The appellant asserted filing the claim in 2017, supported by evidence like speed post receipts. Despite discrepancies in dates and pin codes, the Tribunal found the appellant's claim valid, citing delivery proof and proper documentation. The authorities' rejection was deemed unsubstantiated, leading to a favorable decision for the appellant on this issue.

3. Regarding the transfer of the remaining refund amount to the Consumer Welfare Fund due to unjust enrichment concerns, the appellant argued that the burden of the amounts deposited during investigation was not passed on to buyers. The Tribunal noted the absence of evidence contradicting the appellant's claims and highlighted the authorities' failure to consider the proviso to Section 11B(2) of the Central Excise Act, which allows refund payment instead of crediting to the Fund under certain circumstances. The appellant's entitlement to the refund on duty and interest was upheld based on this provision.

4. The Tribunal emphasized the importance of the certificate from a Chartered Accountant and the appellant's affidavit, both asserting non-passing of the burden to consumers. The lack of a prescribed format for the certificate did not diminish its validity, as long as the content was supported by relevant documents. The Tribunal concluded that the appellant provided sufficient evidence to refute unjust enrichment allegations, ultimately allowing the appeal and setting aside the impugned order in favor of the appellant.