TMI Blog2023 (2) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... s confirmed, against which an appeal was filed which was dismissed by the Commissioners (Appeals) on 29 August, 2008. The assessee filed an appeal before the Tribunal which was allowed by order dated 23 December, 2012 and the matter was remanded to the Commissioner (Appeals). The Commissioner (Appeals), thereafter, by order dated 29 August, 2012 allowed the appeal and set aside the order passed by the adjudicating authority. The assessee thereafter, filed a refund claim on 27 January, 2014. A show cause notice dated 2 April, 2014 was issued requiring the assessee to explain why the refund claim should not be rejected for the reason that it had not been made within one year - The Allahabad High Court examined the provisions of Section 11AB of the Central Excise Act, 1944, which contemplates that the amount shall be refunded to the assessee provided the incidence of such duty had not been passed on by him to any other person. The Allahabad High Court held that any amount deposited during the pendency of the adjudicating proceedings or investigation is in the nature of a deposit under protest and, therefore, the principles of unjust enrichment would not be attracted. This issue was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the appellant. Shri Rajeev Kapoor, Authorized Representative for the Department ORDER M/s Chambal Fertilizers and Chemicals Limited [ the appellant ] has filed this appeal to challenge the order dated 22/26.03.2018 passed by the Commissioner (Audit), Central Excise and CGST, Jodhpur [ the Commissioner (Appeals) ] by which the order dated 30.04.2010 passed by the Commissioner confirming the demand of service tax with interest and penalty has been upheld and the appeal has been dismissed. 2. The appellant is engaged in the manufacture of fertilizers and ammonia. In the year 2006-2007, the appellant entered into various agreements with foreign parties for procurement of rights and licenses for use of technical information for manufacturing fertilizers. Such technical information was in the form of designs, flow drawings, vessel sketches, operating philosophy and material specifications along with other details. 3. A show cause notice for demand of service tax was issued to the appellant on 28.07.2008 proposing recovery of Rs. 1,42,79,138/- on license fee paid to foreign parties for import of technical know-how and engineering design license al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) The amount paid during pendency of proceedings is in the nature of a deposit; (iii) The method of accounting of deposit does not impact the admissibility of refund and in this connection reliance has been place on the decisions of the Tribunal in Commissioner of Customs vs. U.T. Electronics Pvt. Ltd. [ 2019 (12) TMI 1219-Cestat New Delhi ] and Applied Chemical Pharmaceuticals Pvt. Limited vs. CCE ST, Jaipur-I [ 2019 (2) TMI 849-Cestat New Delhi ] ; and (iv) In any case the appellant had booked the amount has recoverable in its books under the head current assets in 20016-17 when the appeal was allowed by the Tribunal. 9. Shri Rajeev Kapoor, learned authorised representative appearing for the department, however, supported the impugned order passed by the Commissioner (Appeals) and referred to it at length. Learned authorised representative also submitted that unjust enrichment means passing not only of duty directly to another person but also indirectly. 10. The submissions advanced by the learned counsel for the appellant and the learned authorised representative for the department have been considered. 11. It transpires that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was allowed and a direction was issued to the adjudicating authority to examine the plea of unjust enrichment. Feeling aggrieved by the remand order, the assessee filed an Appeal before the Tribunal. The Tribunal held that there was no case of unjust enrichment on the facts of the case as the assessee had produced a certificate of the Chartered Accountant that refund claim had not been passed on to the customers. Against this order of the Tribunal, the department filed an Appeal before the Madras High Court. The plea of unjust enrichment was examined and the High Court found that it was not a case of refund of duty since the assessee had deposited the amount under protest at the time of investigation. The High Court found that the Courts had consistently taken a view that any amount deposited during the pendency of adjudicating proceedings or investigation is in the nature of deposit made under protest and, therefore, the principles of unjust enrichment would not apply when a refund is claimed for this amount. The relevant portion of the judgement of the High Court is reproduced below: 7. The first question of law, which is raised, relates to the plea of unjust enrichme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Anti-Evasion Branch of Central Excise Department, NOIDA conducted a search in its premises on 12 January, 2007 and the assessee deposited an amount of Rs. 25,55,000/-. The assessee also deposited an amount of Rs. 2,59,000/- on 21 March, 2007 towards interest. Thereafter, a show cause notice dated 3 July, 2007 was issued to the assessee demanding service tax. The demand was confirmed, against which an appeal was filed which was dismissed by the Commissioners (Appeals) on 29 August, 2008. The assessee filed an appeal before the Tribunal which was allowed by order dated 23 December, 2012 and the matter was remanded to the Commissioner (Appeals). The Commissioner (Appeals), thereafter, by order dated 29 August, 2012 allowed the appeal and set aside the order passed by the adjudicating authority. The assessee thereafter, filed a refund claim on 27 January, 2014. A show cause notice dated 2 April, 2014 was issued requiring the assessee to explain why the refund claim should not be rejected for the reason that it had not been made within one year. No order was passed and, therefore, a writ petition was filed in the Allahabad High Court. The Allahabad High Court examined the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during investigation cannot be considered as deposit. We also find that the decision of the larger Bench in the case of Jayant Industries (Supra) has merged with the Apex Court's decision in the case of ITC ( Supra). Hence, the bar of unjust enrichment would not be applicable even to the amounts deposited during investigations. The contentions raised by Revenue are not tenable. Hence, we do not want to interfere with the findings of the appellate authority. (emphasis supplied) 16. It is, therefore, clear from the aforesaid decisions of the High Courts and the Tribunal that any amount deposited during the pendency of adjudication or investigation is in the nature of a deposit and, therefore, cannot be considered to be towards payment of service tax or excise duty. The principles of unjust enrichment, therefore, would not apply if a refund is claimed for refund of this amount. 17. It also needs to be noted that the refund claim has been rejected on the ground that in 2006-07, the amount deposited was accounted as expense in the Profit and Loss account of the appellant, meaning thereby that the burden of duty had passed. 18. The method of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copper has always been fixed by the Mineral Metal Trading Corporation (MMTC) on the basis of the prevailing price fixed by the London Metal Exchange (LME) and this was done not only for the period in question but also for prior and subsequent period and that only such price could be charged and that no part of the duty in respect of rectified spirit captivity consumed in the manufacture of copper could be added to the price of copper which was fixed on the basis of the LME prices. We have no reason to doubt the correctness of the aforesaid statement contained in the said affidavit. In the circumstances, no case is made out for interference with the direction contained in the impugned judgment of the High Court regarding refund of excise duty paid by the respondent on import of rectified spirit used in the manufacture of copper. The appeals are, therefore, dismissed. No order as to costs. (emphasis supplied) 20. In view of the aforesaid discussion, the order dated 22/26.03.2018 passed by the Commissioner (Appeals) cannot be sustained and is set aside. The appeal is, accordingly, allowed. The appellant would be entitled to refund of the amount of Rs.1,26,59,954/- w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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