2003 (2) TMI 85 - AT - Central Excise

Appeal dismissed; Rs.7,08,520 refund denied as unjust enrichment, Rs.1,34,521 refund allowed; summary dismissal treated as binding precedent

CEGAT dismissed the appeal, holding the claim for refund of Rs. 7,08,520 is barred by unjust enrichment and must be declined, while permitting refund of ... Post-Clearance Adjustments - Precedent - burden of duty - whether post-clearance adjustment like issuance of credit notes or cheques by the assessee who is claiming refund, to buyer of the goods, taking back the burden of duty on the goods would help the assessee to get over the bar of unjust enrichment under Section 11B of the Central Excise Act - HELD THAT:- The main issue that was convassed before us by the ld. Counsel for the appellant was that dismissal of the appeal in Sangam Processors (Bhilwara) Ltd. v. CCE, [1993 (2) TMI 211 - CEGAT, NEW DELHI] by the Supreme Court cannot be treated as a binding precedent since the order of the Supreme Court does not give detailed reasons. In support of the above contention ld. Counsel Shri B.L. Narsimhan relid on the two decisions of the Supreme Court in Sun Export Corpn., Bombay v. Collector of Customs, Bombay, [1997 (7) TMI 117 - SUPREME COURT (LB)] and S. Shanmugavel Nadar v. State of T.N. & Another, [2002 (9) TMI 102 - SUPREME COURT]. We are not therefore inclined to accept the contention raised by the ld. Counsel for the appellant that dismissal of the appeal by the Supreme Court challenging the decision of the Tribunal in Sangam Processors (Bhilwara) Ltd. has no value as a binding precedent. It is submitted before us at the bar that the decision of the Madras High Court in Addison & Co. [2000 (11) TMI 146 - HIGH COURT OF JUDICATURE AT MADRAS] has been taken in appeal and the matter is pending before the Supreme Court. In the result, the claim for refund made by the appellant to the extent of Rs. 7,08,520/- is declined. As far as the claim for refund of Rs. 1,34,521/- is concerned since there is no dispute of the fact that this amount of duty had not been collected by the appellant, it is not hit by the principles of unjust enrichment. Subject to the above clarification, the appeal stands dismissed. Issues involved: The issue involved in this case is whether post-clearance adjustments made by the assessee, such as issuing credit notes or cheques to the buyer of goods to take back the burden of duty, would exempt the assessee from the bar of unjust enrichment under Section 11B of the Central Excise Act.Summary of Judgment:Issue 1: Post-Clearance Adjustments and Unjust EnrichmentThe appellants, who were job workers for a company, received raw materials and supplied processed fabrics to the same company. They paid Additional Excise Duty but later realized the goods were exempt. They refunded the duty amount to the company. The Tribunal had divergent views on whether such post-clearance adjustments could avoid unjust enrichment. The claim for refund was initially rejected based on the principle of unjust enrichment under Section 11B. The appellant argued that a previous decision had been reversed by the Madras High Court. The Tribunal held that the dismissal of an appeal by the Supreme Court constituted a binding precedent, and thus, the claim for refund was declined based on previous rulings.Issue 2: Precedent and Binding Nature of Supreme Court DecisionsThe Tribunal considered the binding nature of Supreme Court decisions and the doctrine of merger. It was emphasized that even the dismissal of a Civil Appeal without reasons would serve as a binding precedent. The Tribunal held that the decision in a previous case, affirmed by the Supreme Court, had to be followed. Consequently, the claim for refund was declined based on established legal principles.In conclusion, the Tribunal dismissed the appeal, stating that the claim for refund of a certain amount was declined due to unjust enrichment principles, while another amount not collected by the appellant was not hit by such principles. The decision was based on the binding nature of Supreme Court precedents and established legal principles regarding unjust enrichment.