2016 (11) TMI 1286 - AT - Central Excise

Refund claim - duty on Sub-Standard Kraft Paper mistakenly - ignorance of Notification No. 217/86-CE dated 01.031986 - time bar - whether unjust enrichment will be applicable to the refund of the duty finalized after 25.06.1999 but pertaining to the period prior to 25.06.1999? - Held that - The issue whether unjust enrichment will be applicable to the refund of the duty finalized after 25.06.1999 but pertaining to the period prior to 25.06.1999 was held to be in favour of the assessee by the Larger Bench of Tribunal in the case of Panasonic Battery India Company Limited 2013 (9) TMI 652 - CESTAT AHMEDABAD where it was held that the doctrine of unjust enrichment will therefore not be attracted to the refunds pertaining to the finalization of provisional assessments for period prior to 25/06/1999 when the linking proviso under Rules 9B(5) of Central Excise Rules 2004 was not existing. The linking provision under proviso to Rule 9B(5) was made by an amendment with effect from 25.06.1999 and will be applicable only w.e.f. 25.06.1999 - the refund cannot be credited to the Consumer Welfare Fund enrichment. The impugned order is set aside and I hold that the appellant is eligible for sanction of refund - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Duty paid on Sub-Standard Kraft Paper mistakenly.
2. Refund claim denied due to time bar.
3. Aspect of unjust enrichment in the refund.
4. Application of unjust enrichment to assessments finalized after 25.06.1999 but pertaining to the period prior to 25.06.1999.

Analysis:
1. The appellants paid duty on Sub-Standard Kraft Paper mistakenly, which was consumed captively in the manufacture of final products. The duty was paid due to ignorance of Notification No. 217/86-CE dated 01.03.1986. The refund claim was filed after paying duty provisionally under protest.

2. The refund claim was partially allowed by the Adjudication authority, sanctioning &8377; 7,05,812.57/- for duty paid in the last six months but rejecting the balance of &8377; 29,80,997/- as time-barred. This decision was challenged by the appellant before the Commissioner (Appeals) and further appealed before the Tribunal, Chennai.

3. The Tribunal remanded the matter to the original authority to consider the aspect of unjust enrichment in light of the Mafatlal Industries case. The Adjudicating Authority sanctioned the refund but ordered it to be transferred to the Consumer Welfare Fund due to lack of proof of no undue enrichment. This decision was appealed by the appellant, leading to a series of litigations and appeals.

4. The issue of unjust enrichment in refunds finalized after 25.06.1999 but related to the period before that date was extensively discussed. The appellant argued that the proviso to sub-rule (5) of Rule 9B, inserted after 25.06.1999, should not apply retrospectively. The Larger Bench of the Tribunal, relying on precedents, held that unjust enrichment would not be applicable to refunds finalized after 25.06.1999 for periods prior to that date, as the proviso to Rule 9B(5) was not in place before 25.06.1999.

In conclusion, the Tribunal held in favor of the appellant, ruling that the refund should not be credited to the Consumer Welfare Fund due to unjust enrichment. The decision set aside the impugned order and declared the appellant eligible for the refund, allowing the appeal with any consequential relief.