Appellate Tribunal refers doctrine of unjust enrichment on imported capital goods for excisable goods to Larger Bench

The Appellate Tribunal CESTAT, Chennai, referred the issue of the applicability of the doctrine of unjust enrichment under Section 27 of the Customs Act to imported capital goods used for manufacturing excisable goods to a Larger Bench for clarification and resolution due to conflicting views presented before the Tribunal. The matter was directed to the President of the Tribunal for the constitution of a Larger Bench to settle the conflicting perspectives on the issue.

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Issues:
1. Applicability of the doctrine of unjust enrichment under Section 27 of the Customs Act to imported capital goods used for manufacturing excisable goods.

Analysis:
In this appeal before the Appellate Tribunal CESTAT, Chennai, the principal issue revolves around determining whether the doctrine of unjust enrichment under Section 27 of the Customs Act is relevant to imported capital goods utilized for the production of excisable goods. The appellants rely on the decision in Grasim Industries v. CCE, Chennai-III, where the issue was whether duty paid on capital goods in a captive power plant attracted the unjust enrichment provision of Section 11B of the Central Excise Act, 1944. Additionally, reference is made to the Madras High Court's judgment in Indo Swiss Synthetic Gem Manufacturing Co. & Another. On the other hand, the Ld. SDR argues for the applicability of unjust enrichment to duty refund claims on capital goods, citing various Tribunal decisions, indicating a conflict of views.

The Tribunal notes a divergence in opinions presented before it, with one set of decisions aligning the Supreme Court's ruling in Union of India v. Solar Pesticides P. Ltd. to imported capital goods, while the opposing citations suggest a conflicting perspective. Given this conflicting scenario, the Tribunal decides to resolve the issue by referring the matter to a Larger Bench for clarification and to settle the conflict. Consequently, the Registry is directed to submit the case papers to the President of the Tribunal for the constitution of a Larger Bench for further deliberation and resolution of the conflicting views presented before the Tribunal.

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