2022 (2) TMI 449 - AT - Central Excise

Appellate Tribunal rules on unjust enrichment in duty payments, allowing refund claim.

Gomti Processors Sachin Versus Commissioner of Central Excise & ST, Surat-I

The Appellate Tribunal CESTAT Ahmedabad ruled in favor of the appellant, holding that the principle of unjust enrichment should not be retrospectively ... Refund claim - Applicability of principles of unjust enrichment - duty was paid provisionally prior to amendment to Rule 9B of Central Excise Rules, 1944 brought into statute with effect from 25.06.1999 - HELD THAT:- In this case, the duty was paid under provisional assessment during December 1998 to May 1999. At the relevant time, there was no provisions of unjust-enrichment in Rule 9B (5) of Central Excise Rules, 1944 and the same was inserted from 25.06.1999. Therefore, the provisions of unjust-enrichment of Rule 9B (5) of Central Excise Rules, 1944 cannot be made applicable retrospectively. Hence the refund claim could not have been rejected on the ground of unjust-enrichment. This Tribunal in the case SHREE BALAJI DYEING AND PRINTING MILLS PVT. LTD. VERSUS CCE & ST- SURAT [2018 (6) TMI 888 - CESTAT AHMEDABAD], while dealing with identical matters has held that The duty paid is pertaining to the period December 1998. The same was paid on 05.06.1999. The assessment was provisional during the relevant period. There was no provision of unjust enrichment in the case of provisional assessment under Rule 9B. This express provision brought into the statute w.e.f 25.06.1999 by inserting the Sub-Rule (5) of Rule 9B of Central Excise Rules, 1944. Appeal allowed - decided in favor of appellant. Issues involved: Application of unjust enrichment in the case where duty was paid provisionally prior to the amendment to Rule 9B of Central Excise Rules, 1944.Analysis:1. Issue of Unjust Enrichment: The main issue in this case revolves around whether the principle of unjust enrichment is applicable when duty was paid provisionally before the amendment to Rule 9B of Central Excise Rules, 1944. The appellant argued that the unjust enrichment provision inserted post-amendment on 25.06.1999 should not be applied retrospectively to cases of provisional assessment. Citing a previous tribunal judgment in the case of Shree Balaji Dyeing and Printing Mills Limited vs. CCE (Appeals), the appellant contended that unjust enrichment does not apply to provisional assessments before the amendment. On the other hand, the Revenue supported the findings of the impugned order.2. Judicial Analysis: The Member (Judicial) carefully considered the arguments presented by both sides and examined the records. It was noted that the duty in question was paid under provisional assessment between December 1998 and May 1999, before the insertion of the unjust enrichment provision in Rule 9B (5) of Central Excise Rules, 1944 on 25.06.1999. As a result, the retrospective application of the unjust enrichment provision was deemed inappropriate. The Member highlighted a previous tribunal order that addressed a similar issue, emphasizing that for duties paid during provisional assessments and subsequent refunds, the unjust enrichment provision is not applicable prior to 25.06.1999. Drawing parallels with the cited judgment, the Member set aside the impugned order and allowed the appeal, concluding that the appellant's refund claim should not be rejected on the grounds of unjust enrichment.3. Conclusion: In this judgment by the Appellate Tribunal CESTAT Ahmedabad, the application of unjust enrichment in cases of provisional duty payment before the relevant amendment was thoroughly analyzed. The decision underscores the principle that retrospective application of statutory provisions, such as unjust enrichment, must be considered in light of the legal framework existing at the time of the transaction. The judgment provides clarity on the non-applicability of unjust enrichment to duties paid provisionally before the specific statutory amendment, offering guidance for similar cases in the future.