Sustainability of rejection of refund in consequential proceedings for unjust enrichment

PJ/Case Laws/2011-12/1305

Case: B. S. Processors v/s Commissioner of C. Ex., Ahmedabad

Citation: 2011(270) E.L.T. 289 (Tri.-Ahmd.)

Issue:- Refund of excess duty paid – Refund claim granted earlier and no unjust enrichment occurred settled in earlier proceedings – consequential refund granted set aside on the same ground of unjust enrichment in subsequent proceedings – not sustainable.

Brief Facts:- Appellant is engaged in processing of fabrics and they started their factory w.e.f. 7-9-2000. As the processed fabrics were under Compounded Levy Scheme during the relevant period, they applied for fixation of Annual Production Capacity. The same was fixed by the Commissioner w.e.f. 11-9-2000. As such, the appellant was required to pay the duty under Compounded Levy Scheme w.e.f. 11-9-2000 onwards. However, they paid the duty erroneously for the entire month of September 2000.

Subsequently, they filed a refund claim for Rs. 80,000/- (Rupees Eighty Thousands only) in respect of excess duty paid by them for the period up to 11-9-2000. The refund claim was allowed but was ordered to be credited to Consumer Welfare Fund. In appeal, the Commissioner (appeals) allowed the appeal on the ground that the appellant were not required to pay any duty for the impugned period and the incidence of duty was also not passed on since there was no production and clearance during the said time.

In terms of said Order-in-Appeal, appellants again approached Revenue Department for grant of refund and refund was granted to them.

Thereafter, fresh proceedings were initiated against the appellant on the ground that the refund of Rs. 80,000/- (Rupees Eighty Thousands only) was erroneously sanctioned to the appellant and was required to be recovered under Section 11A of Central Excise Act. The order was passed by Assistant Commissioner confirming demand of erroneous refund of Rs. 80,000/- (Rupees Eighty Thousands only), on the ground that the appellant has not satisfied the angle of unjust enrichment and has failed to submit any proof on record to show that the said duty has not been recovered by them from their customers. The impugned order was confirmed by the Commissioner (Appeals).

Hence, appellant is before the Tribunal.

Reasoning of Judgement:- The Tribunal found that vide the earlier order dated 11-6-03, the Commissioner (Appeals) has already held in favour of assessee on the issue of unjust enrichment. And in the second proceedings refund was disallowed only on the ground of unjust enrichment. The said issue having been decided in favour of the assessee by earlier order of Commissioner (Appeals), the subsequent grant of refund to the assessee was as a consequential relief in terms of Commissioner (Appeals)'s order. It is also on record that the earlier order of the Commissioner (Appeals) was never put to challenge by Revenue before Tribunal and as such the same had attained finality. In these circumstances, it was not open to the department to initiate proceedings against the assessee on the same very issue of unjust enrichment in respect of same refund. In fact, the said issue was the subject matter of first order of Assistant Commissioner, which stand set aside by Commissioner (Appeals) vide his order dated 11-6-03. In terms of said order, the appellant became entitled to refund, as a consequential relief. As such, refund was given to the appellant as a consequential relief of allowing of his appeal by Commissioner (Appeals). The said order of Commissioner (Appeals) having not been challenged by Revenue, the same very issue could not have been decided by authorities by restarting proceedings again by issuance of Show Cause Notice. Apart from the above, Tribunal also find favour with the appellant's contention that the appellant having started their factory on 7-9-00 and their Annual Production Capacity fixed w.e.f. 11-9-00 and there being no production during the period from 1-9-00 to 7-9-00, the question of clearance of goods and payment of duty does not arise at all. Further as no duty was paid on account of non-production of any goods, the question of recovery of the same from the customers does not arise. As such, even on merit, Tribunal found favour with the appellant's contention. Impugned order set aside.

Decision:- Appeal allowed with consequential relief.

Comments:- This is very interesting case when the show cause notice on the same ground for same amount is once again issued by the department. We have come across the cases where the settled issue in favour assessee in tribunal and High courts has once again started by the department. We have told specifically to the department that if such type of demand is coming than we will move to court rather than once again clearing the process of adjudication, commissioner (Appeal) and tribunal. The department cannot start the legal battle once again on settled issue. But this is unique case where the demand for same period on same period is raised once again. I remember the remarks of a appellate authority in case of demand on created ground that you will accept that our field formation is very innovative. But this type of innovation proves very costlier on poor assessee. We have always pleaded for accountability on government employees. If a demand is dropped then the cost should be recovered from the officer who has raised the demand.

Comments

PJ/Case Laws/2011-12/1305

Post a Comment

Query