2018 (3) TMI 1329 - HC - Central Excise

Court rules unjust enrichment doctrine inapplicable to refund claims pre-25.06.1999

The Commissioner of Central Excise and Service Tax, LTU Versus M/s. Apex Laboratories, Customs, Excise and Service Tax Appellate Tribunal

The High Court of Madras dismissed the appeal, ruling that the doctrine of unjust enrichment did not apply to refund claims from provisional assessments ... Refund claim - finalization of provisional assessment - relevant date - doctrine of unjust enrichment - Whether the 2nd respondent was right in holding that the doctrine of unjust enrichment was not applicable to any claim for refund of duty consequential to finalization of provisional assessment for any period prior to 25.06.99, as the refund claim in the subject case was consequent to finalization of Provisional Assessment on 30.10.2000 for the period 1998-99 especially considering that the amendment to Section 11B of Central Excise Act, 1944 was brought with effect from 01.08.98 whereby refund consequent to finalization after 01.08.98 would be covered by the provisions of Section 11B ibid? Held that: - a similar issue came up for consideration, a Hon'ble Division Bench of this Court in Commissioner of Central Excise, Chennai-I, Vs. Dollar Company Private Limited, [2015 (2) TMI 346 - MADRAS HIGH COURT], after analysing Section 11 B of the Central Excise Act, which relates to claim for refund of duty, other provisions and following the decision of the Hon'ble Supreme Court in Commissioner of Central Excise, Chennai Vs. TVS Suzuki Limited, [2003 (8) TMI 42 - SUPREME COURT OF INDIA], held that the relevant date will be the date of adjustment of the duty after final assessment made thereof. In this case, consequent to the order of the Commissioner (Appeals), the refund claim was made. Therefore, it is clear that the date is well within the time stipulated under Section 11B and there can be no dispute raised by the Department on this aspect. Appeal dismissed - decided against Revenue. Issues Involved:1. Applicability of the doctrine of unjust enrichment to refund claims arising from the finalization of provisional assessments prior to 25.06.1999.2. Entitlement of the first respondent to challenge the correctness of the order rejecting the refund claim based on a previous unchallenged order.Issue-wise Detailed Analysis:1. Applicability of the Doctrine of Unjust Enrichment:The primary issue was whether the doctrine of unjust enrichment applied to refund claims arising from the finalization of provisional assessments for periods prior to 25.06.1999. The appellant argued that the doctrine was applicable, citing the amendment to Section 11B of the Central Excise Act, 1944, effective from 01.08.1998, which required that refunds be claimed within the specified time and that the claimant must establish that the duty incidence had not been passed on to third parties. The appellant referenced the High Court of Mumbai's decision in M/s. Standard Drum & Barrel Mfg. Co., which held that the doctrine of unjust enrichment applied to refunds arising from provisional assessments finalized after 01.08.1998.The tribunal, however, had held that the doctrine did not apply to refunds for periods before 25.06.1999, leading to the appeal. The High Court of Madras, in its judgment, referenced its own decision in Commissioner of Central Excise, Chennai-I vs. Dollar Company Private Limited, which followed the Supreme Court's ruling in Commissioner of Central Excise, Chennai vs. TVS Suzuki Limited. The court concluded that the doctrine of unjust enrichment did not apply to refunds arising from provisional assessments finalized before 25.06.1999, thus dismissing the appellant's argument.2. Entitlement to Challenge the Order:The second issue was whether the first respondent was entitled to challenge the correctness of the order rejecting the refund claim, given that the previous order (Order-in-Original No.77/2000 dated 30.10.2000) had not been challenged and had become final. The appellant contended that the first respondent could not challenge the subsequent order (Order-in-Original No.19/2001 dated 09.05.2001) rejecting the refund claim as it merely followed the findings of the earlier unchallenged order.The court did not explicitly address this issue in detail, as the primary focus was on the applicability of the doctrine of unjust enrichment. However, by upholding the tribunal's decision and dismissing the appeal, the court implicitly allowed the first respondent's challenge to the subsequent order.Conclusion:The High Court of Madras dismissed the appeal, holding that the doctrine of unjust enrichment did not apply to refund claims arising from the finalization of provisional assessments for periods prior to 25.06.1999, following its own precedent and the Supreme Court's rulings. The court implicitly allowed the first respondent's challenge to the order rejecting the refund claim. The substantial questions of law were answered in the negative, against the revenue, and the appeal was dismissed with no costs.