2023 (4) TMI 53 - HC - Central Excise

Refund claim - seeking return of deposit made by the appellants under Section 35F of the Central Excise Act, 1944 - principles of unjust enrichment - violation of principles of natural justice - HELD THAT - Section 11B the of the Central Excise Act pertains to the refund of duty and interest paid on such duty. If a person seeks a refund of excise duty and interest paid, they may apply for the refund, provided that the principle of unjust enrichment does not apply. This means that the person making the refund claim must not have transferred the burden of payment to the buyers and unjustly enriched themselves - Section 35F of the Central Excise Act states that a specific percentage of the duty or penalty must be deposited before filing an appeal. In the case of Suvidhe 1996 (2) TMI 136 - BOMBAY HIGH COURT , the Division Bench of this Court observed that the amount deposited under Section 35F is not a duty at all but is the deposit of availing a remedy of appeal, and for this amount, Section 11B is not applicable. The Appellate Tribunal, in the present order, has concluded that in an earlier remand proceeding, the Tribunal had directed the Commissioner (Appeals) to re-examine whether the Appellant had passed on the duty burden or not and since this order was not challenged, the issue cannot be considered. However, when the Commissioner (Appeals) re-examined the question upon remand, treated the amount in question as a pre-deposit. The Commissioner's order unequivocally stated that the amounts were towards pre-deposit. Therefore, the factual basis for applying the above mentioned decisions has been established in the present order Once the Commissioner (Appeals) has established that the amount in question was a pre-deposit, the legal principle laid down by this Court, which states that the principle of unjust enrichment and Section 11B does not apply to the return of pre-deposits, becomes applicable - Appeal allowed.

Summary

Issues:
The issues involved in the judgment are the challenge to the order of the Customs Excise and Service Tax Appellate Tribunal, Mumbai regarding the payment of Central Excise duty exemption claimed by the Appellant M/s. Poona Rolling Mills, Pune, and the subsequent refund claim filed by the Appellant.

Challenge to Tribunal Order:
The Appellant challenged the order of the Appellate Tribunal regarding the demand for Central Excise duty, which was confirmed by the Respondent - Department. The Appellant filed various appeals and deposited amounts as per directions. The proceedings were remanded to the Appellate Tribunal, which eventually allowed the Appeal. Subsequently, the Appellant filed a refund claim, which was scrutinized by the Assistant Commissioner leading to a show cause notice for rejection of the refund claimed due to lack of evidence.

Principle of Unjust Enrichment:
The Appellant contended that the deposits made were pre-deposits and argued that the principle of unjust enrichment under Section 11B of the Act of 1944 did not apply to their case. The Commissioner (Appeals) initially allowed the Appeal, but upon further challenges and remands, held that the Appellant was not entitled to a refund due to the principle of unjust enrichment. The Appellate Tribunal dismissed the Appeal, leading to the present challenge before the High Court.

Legal Interpretation and Decision:
The High Court considered the legal provisions under Section 11B of the Central Excise Act regarding the refund of duty and interest paid, and Section 35F pertaining to pre-deposits for filing an appeal. The Court referred to previous judgments, including Suvidhe Limited v/s. Union of India, Killick Caribonium v/s Union of India, and Commissioner of Central Excise, Pune-1 v/s. Sandvik Asia Ltd., to establish that the principle of unjust enrichment does not apply to pre-deposits. The Court emphasized that no presumption of passing on the burden to consumers arises from how the amount is treated in the books of accounts.

Final Decision:
The High Court concluded that since the amount in question was a pre-deposit, the principle of unjust enrichment and Section 11B did not apply to the Appellant's case. Referring to relevant legal precedents, the Court allowed the Appeal, quashed the impugned orders, and directed the Respondent to take necessary steps accordingly.