2018 (10) TMI 1415 - AT - Central Excise

Appellate Authority's Refund Rejection Overturned; Excess Duty Claim Valid; Unjust Enrichment Absent

The Appellate Authority's order rejecting the refund claim based on limitation period and unjust enrichment was set aside. The appellant's refund claim ... Refund of excess duty paid - rate of Central Excise duty reduced - time limitation - refund rejected for the reason that it had been filed beyond the period prescribed of one year as contemplated for under Section 11 (B)(1) of the Central Excise Act, 1944 - denial also on the ground of unjust enrichment. Time Limitation - Held that:- The appellant had paid the Central Excise duty on 5 February, 2009 or on subsequent dates. This would be in accordance with Section 11 (B) of the Act. The application seeking refund was filed on 22 January, 2010. Section 11(B) of the Act deals with the period of limitation. It provides that any person claiming refund of any duty of Excise may make an application for refund of such duty before the expiry of one year from the ‘relevant date’. Relevant date has been defined in Explanation (B) of Sub-Section 5 of Section 11(B) of the Act. Clause (f) provides that the date of payment in any other case would be the date of payment of duty. The limitation for filing the refund application would start from the date of payment of duty, which date was 5 February, 2009 or any subsequent date. The refund application was filed by the appellant on 22 January, 2010 - It was, therefore, within time - refund cannot be rejected on this ground. Unjust enrichment - Held that:- In the present case, the Appellant had sold the goods to M/s P.N. Saftech Pvt. Ltd. It had charged excess duty and it is not in dispute that the Appellant had issued a credit note for this excess amount in favor M/s P.N. Saftech Pvt. Ltd. - Such being the position, there is no unjust enrichment. Appeal allowed - decided in favor of appellant. Issues:Refund claim rejection based on limitation period and unjust enrichment.Analysis:1. Refund Claim Barred by Limitation: The appellant filed a refund claim against excess Central Excise duty paid due to a rate reduction from 14% to 8%. The Adjudicating Authority and the Appellate Authority rejected the claim as barred by limitation. However, Section 11(B) of the Central Excise Act provides a one-year period for refund claims from the 'relevant date.' The relevant date is defined in Explanation (B) of Section 11(B)(5), where the date of payment of duty is crucial. In this case, the duty was paid on 5 February 2009, and the refund application was filed on 22 January 2010, well within the stipulated period. The authorities erred in considering the date of invoices as the starting point for limitation, contrary to the statutory provisions. Hence, the limitation argument against the refund claim is unsustainable.2. Unjust Enrichment: The appellant had sold goods to a buyer, charging excess duty due to the rate reduction. However, the appellant issued a credit note to the buyer for the excess amount, eliminating any unjust enrichment. The appellant's action of refunding the excess amount to the buyer demonstrates the absence of unjust enrichment. This position aligns with the decision in M/s Ginni Filaments Ltd., supported by multiple High Court judgments. Therefore, the authorities' contention of unjust enrichment is unfounded in this case.3. Judgment Outcome: Considering the above reasons, the Appellate Authority's order dated 28 November 2011 was set aside. The appeal was allowed, directing the refund of the excess duty amount to the Appellant with interest as per the law. The judgment highlights the correct application of legal provisions regarding limitation periods for refund claims and the absence of unjust enrichment in the appellant's actions, leading to a favorable outcome for the appellant.