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Issues: (i) Whether a separately established unit manufacturing machinery and commencing commercial production after 07.01.2003 qualified as a new industrial unit eligible for exemption under Notification No. 50/2003-C.E. (ii) Whether the refund claim was barred in whole or in part by unjust enrichment.
Issue (i): Whether a separately established unit manufacturing machinery and commencing commercial production after 07.01.2003 qualified as a new industrial unit eligible for exemption under Notification No. 50/2003-C.E.
Analysis: The exemption notification covered new industrial units commencing commercial production on or after 07.01.2003 as well as existing units undertaking substantial expansion. The decisive consideration was whether the unit in question was a separate industrial unit and whether it had commenced commercial production within the notified period. The notification did not incorporate any requirement that eligibility depended upon a certificate from the District Industries Centre or any other State authority. On the facts, the separate unit set up by the assessee for manufacture of machinery was treated as a distinct unit and, following the reasoning applied in the comparable precedent relied on by the Tribunal, it satisfied the condition of a new industrial unit.
Conclusion: Yes. The assessee was entitled to the exemption in respect of the separate unit that commenced production after 07.01.2003.
Issue (ii): Whether the refund claim was barred in whole or in part by unjust enrichment.
Analysis: The assessee produced a Chartered Accountant's certificate which was not disproved by contrary evidence. At the same time, the record showed that a portion of the duty element had been recovered from customers, and that amount could not be refunded. The claim based on an asserted cum-duty adjustment for the remaining amount was not accepted, as the real question was whether the duty incidence had been passed on.
Conclusion: The refund was not barred entirely, but relief was denied to the extent the duty burden had been recovered from customers.
Final Conclusion: The exemption objection failed for the separate unit, but the refund was confined by the doctrine of unjust enrichment, resulting in partial relief to the assessee.
Ratio Decidendi: For exemption under a notification framed for new industrial units, a separately constituted unit that begins commercial production after the specified date can qualify as a new unit, and refund is allowable only to the extent the duty incidence has not been passed on.
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