2017 (4) TMI 1345 - HC - Central Excise

High Court overturns Tribunal decision on unjust enrichment in duty refund claim on MEG. Remand for re-examination.

The High Court allowed the Revenue's appeal, overturning the Tribunal's decision that unjust enrichment did not apply to the refund claim on duty paid on ... Refund claim - Benefit of the Notification numbered 225/86-C.E., dated 3-4-1986 - Section 2 of the Central Duties of Excise (Retrospective Exemption) Act, 1986 - retrospective effect - Held that: - Tribunal is directed to hear the assessee, on the merits of the matter - appeal disposed off. Issues:1. Benefit of Notification 225/86-C.E., dated 3-4-1986 with retrospective effect.2. Unjust enrichment in refund claim on duty paid on Mono Ethylene Glycol (MEG).3. Applicability of unjust enrichment principle to the refund claim.4. Adjudication based on the Supreme Court's decision in Commissioner of Central Excise v. Kesar Enterprises Ltd.Analysis:1. The High Court dealt with an appeal against the Customs, Excise and Service Tax Appellate Tribunal's judgment. The Tribunal had ruled in favor of the assessee on two key findings. First, the assessee was entitled to benefit from Notification 225/86-C.E. dated 3-4-1986 with retrospective effect from 1-3-1986 under the Central Duties of Excise (Retrospective Exemption) Act, 1986. Second, the Tribunal held that the plea of unjust enrichment could not be raised by the Revenue concerning the refund claim on duty paid on MEG during a specific period.2. The Revenue challenged the Tribunal's finding on unjust enrichment, arguing that the principle was applicable to the refund claim despite the Tribunal's decision. The appeal was based on the Supreme Court's judgment in Commissioner of Central Excise, Lucknow v. Kesar Enterprises Ltd., 2006.3. The Court framed a question of law regarding the correctness of allowing the plea against unjust enrichment based on the Tribunal's decision when the Supreme Court had overruled the same Tribunal's decision in a related case. The Revenue contended that the Tribunal's direction on unjust enrichment could not stand in light of the Supreme Court's judgment.4. The Court reversed the Tribunal's judgment to the extent that it held unjust enrichment would not apply to the refund claim by the assessee. The appeal was allowed, and the matter was remanded to the Tribunal for re-examination on merits. The Tribunal was directed to hear the assessee on the matter and dispose of the appeal expeditiously by a specified date.5. Both parties were allowed to raise contentions on the applicability of unjust enrichment to the refund claim. The appeal was disposed of with no order as to costs, and the related application was closed.