CA Bimal Jain
Grasim Industries (the Respondent) purchased Electro Static Precipitators (ESPs) from BHEL, Ranipet on which, concessional 5% ad valorem duty was payable in terms of the Notification No.78/1990-CE dated March 20, 1990 provided an officer not below the rank of Deputy Secretary in the Ministry of Environment and Forests (MoEF) certifies that the goods manufactured are meant for pollution control purpose.
Since, the dispute arose as to whether the Respondent was entitled for concessional rate of duty or not, the Respondent paid normal rate of 15% ad valorem duty and sought for refund of the extra duty paid amounting to Rs. 27,66,970/-. However, the Ld. Commissioner of Central Excise refused to release this refund claimed on the ground that the Respondent had passed on the burden and therefore refunding the extra duty paid would result in unjust enrichment. On appeal being filed to the Ld. Commissioner of Central Excise (Appeal) Chennai, wherein also refund was rejected.
Thereafter, the Respondent preferred an appeal before the Hon’ble CESTAT, where the appeal was allowed in favour of the Respondent by holding that the Capital goods viz. ESPs have been only used captively for pollution control purpose and the same is not used for processing or manufacturing of any other final product and therefore there is no question of passing on the burden of duty to anyone. Being aggrieved, the Revenue preferred an appeal before the Hon’ble Supreme Court.
The Hon’ble Supreme Court relying upon the decision in the case of Indian Farmers Fertiliser Coop. Ltd. Vs. C.C.E. Ahmedabad [1996 (86) ELT 177 (S.C.)] and Union of India Vs. Solar Pesticides Pvt. Ltd.[(2000 (2) SCC 705] (Solar Pesticides Case), held as under:
Thus, the Hon’ble Supreme Court allowed the appeal in favour of the Revenue by setting aside the decision the Hon’ble Tribunal and held that Doctrine of Unjust Enrichment will be applicable in case of refund of duty paid on Capital goods, which are used captively.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: email@example.com)