Dispute Amount Paid as Excise Duty Under Protest After Clearance of Goods is Not Covered by Unjust Enrichment: CESTAT [Read Order]

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that the contested amount paid  as excise duty under protest is not covered by unjust enrichment because it was made long after the items were cleared.

The appellant, Oiles India Pvt. Ltd., obtained an Investment Subsidy against an Entitlement Certificate approved under the Rajasthan Investment Promotion Policy of 2010; this was applied to their returns for the months of January 2014 through June 2015 in order to pay VAT and CST.

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A central excise levy on the investment subsidy was demanded by the Department. The Tribunal ultimately resolved the matter by rejecting the petition for a duty and penalty along with any associated benefits. The appellant submitted a refund claim for the time, and it was approved.

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Additionally, the appellant had submitted a refund claim for the excise duty they had paid on VAT for the following month at their own risk. The refund application was denied by the adjudicating authority due to a lack of time. The appellant's appeal was granted on remand with the observation that the one-year statute of limitations for refund claims is not applicable.

The matter was remanded to the Adjudicating Authority because the question of unjust enrichment has not been specifically investigated. The refund claim was approved by the adjudicating authority while the case was on remand.

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The Department filed an appeal with the Commissioner (Appeals), arguing, among other things, that the assessee had presented the duty paid suo moto/under protest on the RIPS subsidy as "expenses" incurred by them and that the Adjudicating Authority had not reviewed the books of accounts.

Although the Tribunal has previously ruled in other circumstances that the defense of unjust enrichment does not apply in cases where duty deposits were refunded under protest during the investigation, the Adjudicating Authority has already made a decision on the bar of unjust enrichment.

According to the judicial member Binu Tamta's single bench, the burden of any money paid after supplies have been made—whether as a deposit or tax—cannot be transferred to the assessee, and as a result, the test of unjust enrichment is not relevant.

Any amount of cash submitted while an investigation or adjudication process is ongoing is considered a protest deposit, thus the unjust enrichment principles would not apply if a refund was requested for that sum. The deposit “under protest‟ was made against the anticipated liability and which liability though fructified by the respondent-department was set aside by the CESTAT.

To Read the full text of the Order CLICK HERE

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