2001 (2) TMI 484 - AT - Central Excise

Appellate Tribunal grants refund to Kirloskar Brothers Ltd. under Notification No. 239/86-C.E.

The Appellate Tribunal CEGAT, New Delhi allowed the appeal by M/s. Kirloskar Brothers Ltd., granting a refund of Rs. 9,765.50 under Notification No. ... Retrospective exemption - exemption notification - original equipment parts - captive consumption - unjust enrichmentExemption notification - original equipment parts - Retrospective exemption - Whether Notification No. 239/86-C.E., dated 3-4-1986, having retrospective effect from 1-3-1986, restored the pre-existing exemption position so that Valve Blocks used as original equipment parts in manufacture of tractors were exempt - HELD THAT: - The Tribunal found that prior to introduction of the new Central Excise Tariff the goods (Valve Blocks) were covered by exemption notifications when used in manufacture of other excisable goods or as original equipment parts. Notification No. 239/86-C.E., dated 3-4-1986, was issued with retrospective effect from 1-3-1986 to restore the earlier position. The adjudicating authority's view that Notification No. 167/79-C.E. and Notification No. 239/86-C.E. were not similar was rejected on the record: the Tribunal held that both captive consumption in further manufacture and use as original equipment parts continued to be covered by exemption notifications even under the new Tariff, and that the retrospective notification restored the prior exemption position for the goods in question. [Paras 5, 6, 7]Impugned orders rejecting the claim were set aside; the Tribunal accepted that Notification No. 239/86-C.E. restored the earlier exemption position and that Valve Blocks used as original equipment parts were eligible for exemption.Unjust enrichment - Whether the refund claim allowed should be subject to the principle of unjust enrichment - HELD THAT: - While allowing the appeal and setting aside the orders denying refund, the Tribunal made the grant of refund conditional on compliance with the law relating to unjust enrichment. The Tribunal specifically directed that the refund claim would be subject to the principle as articulated by the Supreme Court in Mafatlal Industries v. Union of India, thereby requiring deduction or adjustment as mandated by that precedent before any refund is released. [Paras 7]Refund allowed but will be subject to verification and application of the law of unjust enrichment as per the Supreme Court's decision in Mafatlal Industries.Final Conclusion: The appeal is allowed: the Tribunal held that Notification No. 239/86-C.E. (retrospective from 1-3-1986) restored the pre-existing exemption for the goods when used as original equipment parts, set aside the orders denying refund, and directed that any refund be released subject to the law of unjust enrichment. The Appellate Tribunal CEGAT, New Delhi allowed the appeal by M/s. Kirloskar Brothers Ltd. regarding a refund claim of Rs. 9,765.50 related to Notification No. 239/86-C.E. The Tribunal set aside the order-in-appeal and granted the refund, subject to the law of unjust enrichment as per the Supreme Court's decision in Mafatlal Industries v. Union of India - 1997 (89) E.L.T. 247 (S.C.).