Relief to Royal Enfield, Unjust enrichment did not apply to Refund arising out of Finalisation of Provisional Assessment: CESTAT [Read Order]

In a significant case of M/s.Royal Enfield (Unit of M/s.Eicher Motors Ltd.), the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) of Chennai Bench has held that unjust enrichment did not apply to refund arising out of finalisation of provisional assessment.

The revenue challenged the refundclaim of duty paid on After-Sales Services, Pre-Delivery Inspection charges, and Automobile Cess.  It was argued that the claim of refund is hit by the bar of unjust enrichment andthe respondent is not eligible for a refund of duty paid on these charges on finalization of provisional assessment. Further stated that the amount has to be treated as cum duty under Section 11B and therefore the respondent has to establish that the duty has not been passed on to another.

The Tribunal viewed the Department’scontendsthat the refund is under Section 11AB of the Central Excise Act and not under Rule 9B of Central Excise Rules. It was evident that the provisional assessment for the period 30.12.1983 to 30.06.2000 was finalised on 23.02.2006. The show cause notice as well as the adjudication has been carried out as the finalization of the provisional assessment.

A Coram comprising of Mrs Sulekha Beevi C S, Member (Judicial) and Mr Vasa Seshagiri Rao,  Member (Technical)held that the Department cannot contend that the claim of refund is under Section 11Bto deny the refund on the ground of unjust enrichment.

Further observed that Before 25.06.1999, the bar of unjust enrichment did not apply to a refund arising out of the finalisation of provisional assessment.  In the case of  CCE Mumbai-II Vs Allied Photographics India Ltd. –  2004, it was held that unjust enrichment is not applicable to refund consequent upon finalization of provisional assessment under Rule 9B of Central Excise Rules, 1944. 

The Tribunal upheld the view taken by the Commissioner (Appeals) that the respondent is eligible for a refund. Shri R. Rajaraman appeared on behalf of the appellant and  Shri Raghavan Ramabadran appeared on behalf of the Respondent

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