2024 (7) TMI 1041 - AT - Central Excise

Refund of excess duty allowed as unjust enrichment bar inapplicable for LME-based pricing

M/s National Aluminium Company Limited Versus Commissioner of CGST & Excise, Rourkela

CESTAT Kolkata allowed the appeal regarding refund of excess duty paid. Revenue denied refund claiming unjust enrichment, arguing appellant booked excess ... Refund claim of excess duty borne - denial on account of unjust enrichment - sale of goods on the basis of LME price index. Revenue sought to deny the refund claim on the ground that during the impugned period, when the appellant paid duty at higher rate, the same was booked in the Books of Accounts as revenue expenditure and later on, after the decision, the ld.Commissioner (Appeals) held that the lower rate of duty is payable, the appellant booked in the Books of Accounts as recoverable from the Department, therefore, they are not entitled to claim the refund. HELD THAT:- The said issue has been examined by this Tribunal in the case of COMMISSIONER OF CUSTOMS VERSUS M/S. U.T. ELECTRONICS PVT. LTD. [2019 (12) TMI 1219 - CESTAT NEW DELHI], wherein this Tribunal has observed 'the mere fact that the amount of differential CVD is shown as recoverable in profit and loss account is, in itself, not sufficient to prove that burden thereof has been passed by the assessee to the buyers. Onus otherwise rests upon the Department to prove the same. There is no such evidence produced by the Department. On the contrary, the assessee has placed on record the C.A. Certificate falsifying the allegations of unjust enrichment. Same cannot be ignored, that too. in absence of any evidence to the contrary.' It is further noted that the appellant is selling the goods on the basis of LME price index. Therefore, the issue is to be examined when the goods are sold by the appellant on the basis of LME Price Index, whether Revenue would hit by unjust enrichment or not ? The said issue is examined by the Hon’ble Apex Court in the case of State of Rajasthan & Ors. V. Hindustan Copper [1997 (11) TMI 516 - SUPREME COURT], wherein the Hon’ble Apex Court has observed that 'It has been stated in the said affidavit that the price of copper has always been fixed by the Mineral & Metal Trading Corporation (MMTC) on the basis of the prevailing price fixed by the London Metal Exchange (LME) and this was done not only for the period in question but also for prior and subsequent period and that only such price could be charged and that no part of the duty in respect of rectified spirit captivity consumed in the manufacture of copper could be added to the price of copper which was fixed on the basis of the LME prices.' Admittedly, in this case, the appellant is selling aluminium on the basis of LME Price Index. In that circumstances, the bar of unjust enrichment is not applicable to the facts of this case. As the Revenue has failed to do so, admittedly, the duty element has been borne by the appellant, which has been paid by them to SAILRSP, therefore, they are entitled for refund claim of excess duty paid by them, which was rightly sanctioned by the adjudicating authority vide its Order dated 27.01.2010. The impugned order set aside - appeal allowed. Issues involved:- Denial of refund claim on account of unjust enrichment- Classification dispute regarding excise duty on Coal Tar Pitch- Applicability of unjust enrichment doctrine under Sec.11B of the Central Excise Act 1944- Interpretation of LME price index in relation to unjust enrichmentAnalysis:Issue 1: Denial of refund claim on account of unjust enrichment- The appellant challenged the denial of a refund claim for excess duty borne due to unjust enrichment.- The appellant, a Public Sector Undertaking engaged in manufacturing Aluminum, procured Coal Tar Pitch (CT Pitch) from SAIL-RSP, paying Central excise duty during a disputed period.- The classification dispute between SAIL-RSP and the Central Excise Department led to the appellant paying excess excise duty, which was later determined in favor of SAIL-RSP by the Commissioner (Appeals).- The appellant filed a refund claim, which was initially rejected on grounds of the dispute being under reference.- After multiple adjudications, the refund claim was ultimately rejected on the ground of unjust enrichment, leading to the current appeal.Issue 2: Classification dispute regarding excise duty on Coal Tar Pitch- The dispute between SAIL-RSP and the Central Excise Department regarding the classification of CT Pitch resulted in the appellant paying excess excise duty.- The Commissioner (Appeals) decision favored SAIL-RSP, determining the excise duty payable at a fixed rate, which was already collected from the appellant.Issue 3: Applicability of unjust enrichment doctrine under Sec.11B of the Central Excise Act 1944- The doctrine of unjust enrichment under Sec.11B of the Central Excise Act 1944 was invoked to deny the refund claim to the appellant.- The Revenue argued that the duty paid by the appellant was booked as revenue expenditure during the disputed period, making the refund claim subject to unjust enrichment.Issue 4: Interpretation of LME price index in relation to unjust enrichment- The appellant contended that as they sell goods based on the LME price index, the refund claim should not be subject to unjust enrichment.- Citing precedents and decisions, including the case of State of Rajasthan v. Hindustan Copper, the appellant argued that the LME price index basis exempts them from the bar of unjust enrichment.- Previous tribunal decisions and judicial pronouncements were referenced to support the appellant's position that selling goods based on the LME price index does not lead to unjust enrichment.Conclusion:- The Tribunal, after considering submissions and precedents, held that the appellant, selling goods based on the LME price index, is not subject to the bar of unjust enrichment.- The Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellant.