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

CESTAT Kolkata allowed the appeal regarding refund of excess duty paid. Revenue denied refund claiming unjust enrichment, arguing appellant booked excess duty as revenue expenditure initially then as recoverable from department after lower duty rate determination. Tribunal held that merely showing differential amount as recoverable in profit/loss account insufficient to prove burden passed to buyers without departmental evidence. Since appellant sold goods based on LME price index, following Supreme Court precedent in State of Rajasthan v. Hindustan Copper, unjust enrichment bar was inapplicable as LME prices are externally fixed and duty cannot be added to such predetermined prices. Refund claim allowed.

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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 enrichment

Analysis:

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.

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