2016 (10) TMI 1160 - AT - Central Excise

Tribunal remands case for fresh examination on unjust enrichment in Central Excise Act refund appeal.

The Tribunal allowed the appeal by remanding the case to the original adjudicating authority for a fresh examination. It emphasized the applicability of ... Unjust Enrichment - refund claim - whether unjust enrichment is applicable in case of refund of pre-deposit made u/s 35F of CEA, 1944? - Held that: - the Hon’ble Supreme Court in case of Sahakari Khand Udyog Mandal Ltd. [2005 (3) TMI 116 - SUPREME COURT OF INDIA] clearly held that in respect of all the refunds even not covered under Section 11B, unjust enrichment is applicable - even in case of refund of pre-deposit amount, the provisions of unjust enrichment is applicable. The appellant shall be given sufficient opportunity of personal hearing and for submitting necessary documents to prove their case on the aspect of unjust enrichment - appeal allowed by way of refund. Issues:1. Whether unjust enrichment is applicable in case of refund of pre-deposit made under Section 35F of Central Excise Act, 1944.Analysis:Issue 1: Whether unjust enrichment is applicable in case of refund of pre-deposit made under Section 35F of Central Excise Act, 1944.The appeal revolved around the question of whether unjust enrichment applies to the refund of pre-deposits under Section 35F of the Central Excise Act, 1944. The appellant argued that unjust enrichment does not apply to such refunds, citing specific judgments in support. On the contrary, the Revenue contended that the principle of unjust enrichment is applicable to all refunds, referencing a Supreme Court decision. The Tribunal examined the arguments and referred to the Supreme Court's ruling that unjust enrichment applies to all refunds, even those not covered by Section 11B provisions. The Tribunal noted that the adjudicating authority did not assess whether the pre-deposited amount's incidence had been passed on to others. It emphasized that the Bombay High Court judgment cited by the appellant did not consider the Supreme Court's decision, making the latter binding. Consequently, the Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority for a fresh examination. The Tribunal directed the authority to verify the factual matrix regarding unjust enrichment and provide the appellant with an opportunity to establish their case. The Tribunal instructed that a new adjudication order should be issued within three months from the date of the current order.In conclusion, the Tribunal allowed the appeal by way of remand, emphasizing the applicability of unjust enrichment to the refund of pre-deposits under Section 35F of the Central Excise Act, 1944. The decision highlighted the need for a thorough examination of the factual aspects related to unjust enrichment and granted the appellant an opportunity to present their case effectively.