2026-VIL-855-GUJ-CE
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CENTRAL EXCISE High Court Cases

Central Excise – Refund of duty paid on galleries of stenter machines – Rejection of refund claims on ground that determination of Annual Production Capacity was not challenged and presumption against appellants under Section 12B could not be discharged – Appellants engaged in manufacture of excisable goods under compounded levy scheme filed refund claims for duty paid on galleries of stenter machines for the period from 16.12.1998 to 28.02.2000, contending that galleries should not be included in the dimensions of hot air stenter for determining Annual Production Capacity - Commissioner (Appeals) allowed the appeals holding the levy unconstitutional and accordingly not governed by the provisions of Section 11B and Section 12B - Tribunal allowed the Revenue's appeals observing that the principle of unjust enrichment and consequently refund claims cannot be sustained – Whether the determination of Annual Production Capacity is an appealable order and whether the principle of unjust enrichment applies when the levy is unconstitutional – HELD – The determination of Annual Production Capacity by the prescribed authority is an administrative exercise and not a quasi-judicial order and therefore does not give rise to any appealable order, consequently where a refund claim arises on account of erroneously collected duty on account of inclusion of galleries in the Annual Production Capacity, the assessee is entitled to claim refund without challenging the determination of Annual Production Capacity - When the levy itself is found to be unconstitutional as clarified by the Hon'ble Apex Court and the Rules of 2000, the provisions of Section 11B relating to limitation and the burden under Section 12B to prove that duty was not passed on to third parties would not apply as the principle of unjust enrichment enunciated in Mafatlal Industries applies only to levies which are otherwise valid but erroneously collected, and not to levies which are unconstitutional – The impugned order of the Tribunal is quashed and set aside, the order of Commissioner (Appeals) is restored with a direction to the Commissioner to redetermine the Annual Production Capacity of the appellant excluding the galleries of the stenter in accordance with the applicable Rules and thereafter determine the duty payable and process the refund claim accordingly - Tax Appeals are dismissed
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