2011 (2) TMI 36 - AT - Central Excise

Tribunal remands case for refund claim verification without unjust enrichment

The Tribunal allowed the appeal, remanding the case to the Adjudicating Authority to verify the refund claim without unjust enrichment. The decision ... Refund of the duty – Duty paid under protest in pursuance to the order of the Commissioner of Central Excise dated holding their product as manufactured product - Final Order of Bench holding such activity does not amount to manufacture, they claimed the refund of the amount paid through PLA - appellant utilized the cenvat credit for discharge of duty liability, appellant had reversed the cenvat credit which he has taken - Appeal allowed by way of remand to the Adjudicating Authority for considering the refund claim after the appellant has satisfied him about the non-passing of the incidence of duty i.e., that there is no unjust enrichment Issues:1. Classification of product as excisable2. Rejection of refund claim3. Adjustment of cenvat credit and interest liabilityClassification of product as excisable:The case involved a dispute regarding the classification of Suplhur Bentonite as a manufactured product subject to excise duty. The appellants, engaged in fertilizer production, contested the revenue's classification and paid duty under protest. The Tribunal previously held that Suplhur Bentonite was not a manufactured product, leading to a refund claim by the appellants. The Adjudicating Authority rejected the refund claim, prompting an appeal to the Commissioner (A).Rejection of refund claim:The learned Counsel for the appellant argued that the adjustment of cenvat credit and interest liability against the refund claim was erroneous. They maintained that they had not wrongly availed credit and thus should not be liable to reverse it or pay interest. Citing legal precedents, they contended that they only sought a refund for the duty paid through PLA or account current, not for wrongly availed credit. On the other hand, the SDR argued that interest was leviable on the wrongly availed cenvat credit due to the appellant's knowledge that Suplhur Bentonite was not dutiable.Adjustment of cenvat credit and interest liability:The Tribunal analyzed the submissions and records, emphasizing that the appellant had utilized cenvat credit to discharge duty liability on Suplhur Bentonite during the relevant period. It was noted that the appellant had reversed the cenvat credit taken, making the revenue's claim of wrongful availment incorrect. The Tribunal ruled in favor of the appellant, setting aside the impugned order and remanding the matter to the Adjudicating Authority. The Authority was tasked with determining the eligibility of the refund claim in light of unjust enrichment principles, ensuring natural justice in the process.In conclusion, the Tribunal allowed the appeal by remanding it to the Adjudicating Authority for a limited purpose of verifying the refund claim without unjust enrichment. The decision highlighted the importance of correctly assessing cenvat credit utilization and interest liability in excise duty matters.