2015 (10) TMI 836 - AT - Central Excise

Denial of refund claim - Unjust enrichment - Held that - It is very strange that the Commissioner (Appeals) has not considered the verification of the Range Officer of the Central Excise, who found that the appellant issued credit notes to all the concerned 18 dealers in respect of the excess duty earlier paid and charged from the said dealers. In other words, the appellant had passed the element of excess Central Excise duty benefit to the respective customers and the department clearly verified the said issue and established that there had not been any question of unjust enrichment as per the facts of the case. Therefore, the impugned order of the Commissioner (Appeals) has not been based on the facts on record and does not deserve sustainability under the eyes of the law - It is unfortunate that for a small amount of ₹ 92,111/-, the appellant has been fighting the case for about last 20 years. From the facts on record and the discussion above, it is clear that there has been no unjust enrichment to the appellant namely, M/s Paper packaging Pvt. Ltd. and they deserve sanction of refund claim of ₹ 92,111/-. It is ordered that the refund amount of ₹ 92,111/- be sanctioned and paid to the appellant within 8 weeks from the day, the appellant approaches the Department of Central Excise for sanction of the said refund. - Decided in favour of assessee.

Summary

Issues: Appeal against disallowance of refund on grounds of unjust enrichment.

Analysis:
1. Issue of Disallowance of Refund: The appeal was filed against the order disallowing the refund of &8377; 92,111 by the Commissioner (Appeals) on the grounds of unjust enrichment. The appellant, M/s Paper Packaging (P) Ltd., Shimoga, had issued credit notes to 18 dealers for the excess Central Excise duty earlier paid and charged from them. The Range Officer of the Central Excise had verified this and confirmed that the excess duty benefit was passed on to the customers, eliminating any unjust enrichment. The Commissioner (Appeals) did not consider this verification, leading to an unjust disallowance of the refund. The Tribunal found that the impugned order lacked factual basis and was unsustainable under the law.

2. Unjust Enrichment Principle: The Tribunal emphasized that the appellant had not been unjustly enriched and had been fighting the case for approximately 20 years over a relatively small amount. The facts on record clearly demonstrated that the excess duty amount had been passed on to the customers, thereby negating any unjust enrichment on the part of the appellant. Consequently, the Tribunal ordered the refund claim of &8377; 92,111 to be sanctioned and paid to the appellant within 8 weeks of the application to the Department of Central Excise.

3. Decision and Conclusion: The Tribunal allowed the appeal, directing the sanction and payment of the refund amount with consequential benefits to the appellant. The case highlighted the importance of considering all relevant evidence, such as the verification by the Range Officer, in determining unjust enrichment claims. The judgment underscored the need for a thorough examination of facts to ensure a just and lawful decision in matters concerning refund disallowances based on unjust enrichment principles.