2016 (3) TMI 949 - AT - Central Excise

Tribunal clarifies captive gauge eligibility under Notification No. 217/86, denies refund claim

M/s Mahindra & Mahindra Ltd. Versus Commissioner of Central Excise, Mumbai

The Tribunal held that gauges consumed captively were eligible for the notification, citing the decision of the Hon'ble Supreme Court in a similar case. ... Doctrine of unjust enrichment - refund claim rejected - whether the C.A. certificate is sufficient to establish that there was no unjust enrichment ? - Held that:- The doctrine of unjust enrichment is attracted in the instant case. We find that the appellant had failed to produce any original records before the adjudicating authority and their claim to lack of the unjust enrichment is based solely on the C.A. certificate. It is not understood that how when the original records are not available, the C.A. could give a certificate. It is seen from the extract of the C.A. certificate that the excise duty paid in respect of gauges was charged as expenditure during the respective years. The fact that it has been charged as expenditure indicate the facts that the same has been recovered from the customer. In view of the above, the appellant failed to establish that there was no unjust enrichment in the instant case. - Refund not allowed. Issues:1. Classification of gauges under Central Excise duty and eligibility for Notification No. 217/86.2. Interpretation of Notification No. 217/86 regarding exemption of goods used in manufacturing final products.3. Claim of refund for duty paid on gauges consumed captively.4. Doctrine of unjust enrichment in case of duty paid under protest for captive consumption.Issue 1: Classification of Gauges and Eligibility for Notification No. 217/86:The case involved the classification of gauges under Central Excise duty and the eligibility for the benefit of Notification No. 217/86. The Commissioner (Appeals) initially remanded the matter back to the original adjudicating authority, emphasizing the classification of gauges as finished products used for measuring tools. The Dy. Commissioner later allowed the benefit of the notification on the impugned goods, which was challenged by the Revenue. The Commissioner (Appeals) set aside the Dy. Commissioner's order, stating that gauges, being measuring tools, did not qualify for the exemption under Notification No. 217/86 for captive consumption. The Tribunal held that gauges consumed captively were eligible for the notification, citing the decision of the Hon'ble Supreme Court in a similar case.Issue 2: Interpretation of Notification No. 217/86:The interpretation of Notification No. 217/86 was crucial in determining the exemption of goods used in manufacturing final products. The notification exempted goods used within the factory of production for the manufacture of final products from excise duty, with exclusions like capital goods. The Tribunal referred to the Hon'ble Supreme Court's observations in a related case to clarify the scope of the exclusion clause, emphasizing the distinction between goods used for production or processing and those used in or in relation to the manufacture of final products. This interpretation guided the decision to allow the benefit of the notification to gauges consumed captively.Issue 3: Claim of Refund for Duty Paid on Gauges Consumed Captively:Following the Dy. Commissioner's order allowing the benefit of Notification No. 217/86, the appellant filed a refund claim for duty paid on gauges consumed captively. However, the claim was rejected due to the lack of supporting vouchers or evidence to establish no unjust enrichment. The appellant argued that a C.A. certificate was sufficient to prove the absence of unjust enrichment, especially in cases of duty payment under protest. The Tribunal considered the arguments but upheld the rejection of the refund claim, emphasizing the need to demonstrate the absence of unjust enrichment conclusively.Issue 4: Doctrine of Unjust Enrichment for Duty Paid Under Protest in Captive Consumption:The doctrine of unjust enrichment was a pivotal aspect in cases of duty paid under protest, especially in the context of captive consumption. The appellant relied on a C.A. certificate to support their claim of no unjust enrichment, citing precedents and Supreme Court decisions. However, the Tribunal found the appellant's evidence insufficient, noting the absence of original records and relying solely on the C.A. certificate. The Tribunal concluded that the excise duty paid on gauges had been recovered from customers, indicating unjust enrichment, and dismissed the appeal accordingly.This detailed analysis of the legal judgment highlights the key issues, interpretations, arguments presented, and the Tribunal's decisions on each aspect of the case.