2024-VIL-1727-CESTAT-DEL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Refund claim, Unjust enrichment, Price fixed by statutory authority, Amount deposited under protest – Appellant is engaged in lignite mining activities and supplied the entire lignite mined exclusively to JSW Energy (Barmer) Limited (JSWEBL). The price of the mined lignite was to be fixed by the Rajasthan Electricity Regulatory Commission (RERC), a State Regulatory Authority. The appellant filed a refund claim of amount deposited under protest during the pendency of the adjudication proceedings and investigation - Whether the doctrine of unjust enrichment is applicable to the refund claim of the amount deposited under protest during the pendency of the adjudication proceedings and investigation - HELD - The amount deposited during the pendency of the adjudication proceedings or investigation is in the nature of a deposit, therefore cannot be considered to be towards payment of duty and cannot be subjected to the rigour of unjust enrichment under Section 11B of the Central Excise Act, 1994 – Various decisions of Tribunal and High Court consistently held that the doctrine of unjust enrichment is not applicable to claims filed for the amount deposited during the course of investigation or pendency of adjudication proceedings - the impugned order is set aside and the refund claim of the appellant is allowed - Whether the mere accounting treatment of the refund amount in the books of accounts as expenditure would lead to the conclusion that the incidence of duty has been passed on to the customers - HELD - the manner of accounting, where the amount is shown in the Profit & Loss Account as expenditure, does not prove that the appellant has unjustly enriched itself - the method of accounting followed does not impact the admissibility of refund and cannot be the basis to hold that the incidence of duty had been passed - Whether the bar of unjust enrichment is applicable when the price is fixed by the statutory authority - HELD - The bar of unjust enrichment is not applicable when the price is fixed by the statutory authority, in this case, the RERC. The Tribunal relied on the observations made in its earlier order and the decisions of the Supreme Court in State of Rajasthan vs. Hindustan Copper Ltd. and the Madras High Court in Commissioner of Central Excise, Coimbatore vs. Flow Tech Power, which have held that when the price is fixed by the Government or a statutory authority, the issue of unjust enrichment would not be applicable.
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