1998 (6) TMI 239 - AT - Central Excise

Summary

Issues:
1. Rejection of refund claims by the Assistant Collector and subsequent appeals.
2. Classification of goods and eligibility for exemption under Notification 208/83.
3. Application of unjust enrichment concept.
4. Discrepancy in the value of clearances and duty payment.
5. Decision of the Collector (Appeals) and grounds for rejection.
6. Setting aside the impugned order and remanding the matter.
7. Applicability of Section 11B(2) of the Central Excise Act.

Analysis:
1. The appellant filed two refund claims which were rejected by the Assistant Collector of Central Excise. The Collector of Central Excise (Appeals) rejected one appeal involving a refund claim of Rs. 27,216 but allowed the other appeal related to a refund claim of Rs. 1,20,000. The present appeal challenges the rejection of the former claim.

2. The appellant argued that the refund claim was not affected by unjust enrichment as it was not pending when Section 11-B was amended. They contended that the goods in question were correctly classified under Tariff Item 25 and eligible for exemption under Notification 208/83. The Assistant Collector's classification was disputed, claiming eligibility for small scale industry benefit under Notifications 77/83 and 77/85.

3. The Departmental Representative supported the rejection of the appeal, while the Collector (Appeals) rejected the refund claim of Rs. 27,216 based on the value of clearances exceeding Rs. 50 lakhs and the appellant's failure to substantiate their claim under Notification 77/85.

4. The Collector (Appeals) accepted the appellant's argument regarding the incorrect ceiling amount but still rejected the appeal due to the appellant's failure to satisfy the conditions of Notification 77/85. The discrepancy in the value of clearances and duty payment was a key point of contention.

5. The impugned order was set aside, and the matter was remanded to the Assistant Commissioner for a fresh decision applying the appropriate exemption notification. The Collector (Appeals) had decided on different grounds than the Assistant Collector, warranting a review.

6. If a refund is found admissible on merits, Section 11B(2) of the Central Excise Act would apply to the aspect of unjust enrichment. The appellant's argument that this provision would not apply was rejected. The matter was to be reconsidered by the Assistant Commissioner based on the correct ceiling amount and eligibility for exemption.

7. The rejection of the refund claim by the Assistant Collector for applying the wrong ceiling necessitated a fresh decision on merits. If the claim is found admissible, the provisions of Section 11B(2) would come into play, considering the concept of unjust enrichment in accordance with the Act.