2003 (10) TMI 199 - AT - Central Excise

Appeal granted for Central Excise duty refund on physician samples exemption eligibility and free distribution

The Tribunal allowed the appeal filed by Sarabhai Chemicals P. Ltd., determining that the refund of Central Excise duty paid for physician samples was ... Refund of Central Excise duty - exemption for physician samples - unjust enrichment - free distribution of samples - remand for verificationRefund of Central Excise duty - exemption for physician samples - unjust enrichment - free distribution of samples - Entitlement to refund of duty paid on physician samples distributed free and whether the doctrine of unjust enrichment precludes refund. - HELD THAT: - The appellants paid duty on physician samples which, on the facts, were distributed free and were eligible for exemption under the notification relied upon. The Tribunal found that where goods are undisputedly distributed free, there is no basis for treating the duty burden as having been passed on to any buyer; consequently the contention of potential unjust enrichment did not arise. The original authority's grant of refund therefore correctly applied the exemption and was legally sustainable. [Paras 1, 2]Refund was rightly granted; unjust enrichment does not arise in the case of free distribution and does not bar the refund.Remand for verification - remand by Commissioner (Appeals) - Validity of the remand order passed by the Commissioner (Appeals) and the fate of consequential orders made pursuant to that remand. - HELD THAT: - The remand was ordered on grounds that the original authority had not examined unjust enrichment and because of a pending Supreme Court appeal. Having held that unjust enrichment was not a tenable ground in the facts and noting that the Supreme Court has decided the issue in favour of claimants, the Tribunal concluded that the remand was unnecessary. Consequently, orders passed pursuant to the impugned remand cannot stand and must be set aside. [Paras 1, 3]The remand was unjustified and the orders passed pursuant to it cannot survive; the appeal is allowed.Final Conclusion: The appeal is allowed: the grant of refund for physician samples distributed free was correct (unjust enrichment did not apply) and the remand and consequential orders are set aside. Issues: Refund of Central Excise duty paid for physician samples, unjust enrichment, remand order validity, exemption eligibility, appeal outcomeIn this case, the appeal was filed by Sarabhai Chemicals P. Ltd. against the order of remand passed by the Commissioner (Appeals) Central Excise & Customs, Vadodara, regarding the refund of Central Excise duty paid for physician samples exempt under Notification No. 48/77. The impugned remand order was challenged by the Revenue, citing reasons of unjust enrichment and a related appeal in the Supreme Court. The appellants argued that unjust enrichment does not apply as the physician samples were distributed free, eliminating the possibility of passing on duty burden to buyers. The Counsel highlighted the Supreme Court's decision in a similar case [1999 (107) E.L.T. 579 (S.C.)]. The Tribunal examined the case, noting the free distribution of samples and the clear exemption eligibility, concluding that the refund was rightfully granted, and the appeal against it lacked merit. Additionally, during the appeal process, an order was passed by the original authority in line with the remand order, which was also appealed and disposed of similarly.The Tribunal found the original refund order to be correct and legal, leading to the allowance of the present appeal. Consequently, the orders passed following the impugned order were deemed unsustainable in light of the Tribunal's decision to allow the appeal, thereby resolving the issue of refund eligibility for the Central Excise duty paid for physician samples effectively.