2023 (9) TMI 176 - AT - Central Excise

Refund claim alongwith interest - duty paid under protest - unjust enrichment - SSI Exemption - clubbing of clearances - clearances beyond exemption limit - denial of benefit of exemption Notification dated 01.03.1978 - HELD THAT - The said issue has been settled by this Tribunal vide its Order dated 06.10.1986, wherein this Tribunal has observed that appellants cannot be denied the benefit of Notification No. 71/78. In view of the orders dated 06.10.1986, 15.12.1986 25.10.1989 of this Tribunal, the appellants filed various refund claims on various occasions in the years 1986 and 1989. Thereafter, various show-cause notices were issued to the appellants to deny the said refund claim on the ground that the said refund claims are barred by limitation and the provisions laid down under Rule 233B of the Central Excise Act, 1944 for payment of duty under protest have not been observed by the appellants. The refund claims were rejected , but on appeal the ld.Commissioner (Appeals) of Allahabad Calcutta, held that the duty was paid under protest after following the procedure of Rule 233B and hence refund claim cannot be treated as time barred and remanded back the matter to the Assistant Commissioner for entertaining the refund claim, but the refund claims were rejected on the ground of unjust enrichment on 31st January, 1992. On going through the said and the certificate issued by the recipient of the goods, it is clear that the duty component has been borne by the appellants themselves. Moreover, the appellants have cleared the good to Bihar State Electricity Board under IBRD Financed Project and for the said clearance, the appellant is not liable to pay duty at all on their clearance, but the fact that the appellants were denied the benefit of SSI exemption, therefore, the appellants paid duty under protest and cleared their goods. Unjust enrichment - HELD THAT - The adjudicating authority has gone beyond the scope of show-cause notice for entertaining the refund claim. As from the facts itself, it is clear that the appellants were not required to pay any duty on the goods cleared to BSED and not collected any duty from BSED. Moreover, the duty has been paid by the appellants themselves, we hold that the appellants have passed the bar of unjust enrichment. Interest - HELD THAT - The appellants are entitled to claim the interest after three months from the filing of the refund claim till realization. Therefore, the interest allowed to the appellants after three months from the date of filing of the refund claim till its realization and the interest shall be paid at the rate of 12% as held by this Tribunal in the case M/S SHREE RAJASTHAN SYNTEX LIMITED VERSUS COMMISSIONER, CENTRAL GOODS AND SERVICE TAX (COMMISSIONERATE) RAJASTHAN 2023 (7) TMI 950 - CESTAT NEW DELHI . All the appeals are allowed.

Summary

Issues Involved:
1. Denial of SSI exemption by clubbing clearances of two entities.
2. Rejection of refund claims on grounds of limitation and unjust enrichment.
3. Entitlement to interest on delayed refund claims.

Summary:

Issue 1: Denial of SSI Exemption by Clubbing Clearances
The appellants, M/s Gillooram Gaurishankar and M/s G.P. Dalmia & Sons, were engaged in manufacturing electrical conductors and were registered as Small Scale Manufacturers under SSI exemption Notification No.175/86-CX dated 01.03.1986. The Central Excise Authorities denied the SSI exemption by clubbing the clearances of both entities, arguing that the proprietor of M/s G.P. Dalmia & Sons was also a partner in M/s Gillooram Gaurishankar. This clubbing pushed the clearances beyond the exemption limit. However, the Tribunal, in its orders dated 06.10.1986, 15.12.1986, and 25.10.1989, held that both entities were distinct for the purposes of the Central Excise Act and could not be treated as a single entity.

Issue 2: Rejection of Refund Claims on Grounds of Limitation and Unjust Enrichment
Following the Tribunal's orders, the appellants filed refund claims for the duty paid under protest. Various show-cause notices were issued to deny these refund claims on the grounds of limitation and non-compliance with Rule 233B of the Central Excise Rules, 1944. The Commissioner (Appeals) set aside these objections, ruling that the duty was indeed paid under protest, and remanded the case for fresh adjudication. However, the Assistant Collector rejected the refund claims again, this time on the grounds of unjust enrichment. The appellants challenged this, arguing that the concept of unjust enrichment was introduced only in 1991 and should not apply to their earlier claims. They also contended that no show-cause notice regarding unjust enrichment was issued, violating the procedural requirements as per CBEC Circular No.19/93-CX-6 dated 29.12.1993.

Issue 3: Entitlement to Interest on Delayed Refund Claims
The Tribunal found that the appellants had not collected any duty from Bihar State Electricity Board, to whom the clearances were made, and thus had borne the duty themselves. The Tribunal held that the appellants had passed the bar of unjust enrichment and were entitled to the refund. Additionally, the Tribunal ruled that the appellants were entitled to interest on the delayed refund claims from the date of filing the refund claim till realization, citing the Supreme Court's decision in Ranbaxy Laboratories Limited Vs. Union of India, which mandates interest payment from three months after the refund claim application date. The Tribunal set the interest rate at 12%, referencing its own decisions and those of other benches.

Conclusion:
The Tribunal allowed all the appeals with consequential relief, including the refund of the duty paid under protest and interest at the rate of 12% per annum from three months after the filing of the refund claims until their realization.