Commissioner, Central Goods And Service Tax vs. M/S East INDIA Udyog Limited

Held

The Court held that the appeal was concluded by concurrent findings of fact. The primary issue concerning the tax-free zone exemption was the subject of a previous appeal (Central Excise Appeal No. 12 of 2018) before this Court, where no interim order was granted to the appellant. The crucial finding that the respondent had not passed on the burden of Rs. 1,00,00,000/- to its customers was consistently recorded by the Assistant Commissioner, Commissioner (Appeals), and the CESTAT. The Court repeatedly asked the appellant's counsel to point out any evidence indicating the burden was passed on, but none was produced. Therefore, the concurrent findings of fact by the Tribunal and the authorities below were not found to be perverse. The Court noted that in cases of refund of deposits/pre-deposits due to orders of appellate authorities or courts setting aside demands, the principles of unjust enrichment are not applicable as the amounts deposited never took the character of duty. The Court relied on the Allahabad High Court's decision in Ebizl. Com Pvt Ltd vs CCE & ST. Consequently, no substantial question of law arose for consideration. The appeal was dismissed.

Facts

The Commissioner, Central Goods and Service Tax (CGST), Ghaziabad is the appellant, and M/s East India Udyog Limited is the respondent. The dispute pertains to the refund of Rs. 1,00,00,000/- deposited by the respondent during an investigation. An order-in-original dated 23.05.2012 had demanded duty of Rs. 2,45,41,600/-. The CESTAT set aside this order on 16.05.2017. Subsequently, the respondent sought the refund of the deposited amount. The Assistant Commissioner, CGST, Ghaziabad, allowed the refund on 13.03.2018, finding no unjust enrichment as the respondent had not passed on the burden to customers, supported by a CA certificate. The Commissioner (Appeals) dismissed the department's appeal on 26.04.2019, upholding the refund. The CESTAT also dismissed the department's appeal, affirming the concurrent finding of no unjust enrichment. The present appeal is filed by the CGST Commissioner against the CESTAT's order.

Key Issues

1. Whether the manufacturing of components of transformers outside a tax-free zone can be treated as manufactured within a tax-free zone for excise duty exemption (Section 5A of the Central Excise Act, 1944, and relevant notifications)? The appellant argued that manufacturing most components at Sahibabad, outside the tax-free zone, meant the transformers were not manufactured in the tax-free zone of Roorkee, thus not eligible for exemption. The respondent contended that the main unit was in the tax-free zone, and the order-in-original demanding duty was set aside by CESTAT. 2. Whether the principle of unjust enrichment is applicable to the refund of Rs. 1,00,00,000/- deposited during investigation, given that the demand was set aside by CESTAT? The appellant argued that the refund was sanctioned solely on a CA certificate without sufficient documentary evidence to establish that the duty incidence was not passed on. The respondent argued, and the lower authorities found, that the deposited amount was not recovered from customers, and the principle of unjust enrichment was not applicable as the amount was a deposit pending adjudication, not duty. The appellant relied on the need for proper examination of evidence beyond a CA certificate, while the respondent and lower authorities relied on the CESTAT's decision and the principle that deposits made pending adjudication, which is later set aside, do not attract unjust enrichment.