2000 (12) TMI 801 - AT - Central Excise

Refund - Duty paid under protest - Unjust enrichment - Burden of proof - Interpretation of Statute - Retrospective effect - Doctrine of unjust enrichment

Issues:

1. Whether the appellants passed on the incidence of duty to the buyers, invoking the doctrine of unjust enrichment.
2. Whether the assessments were provisional or final.
3. Whether the appellants provided sufficient documentary evidence to rebut the presumption under Section 12B of the Central Excise Act, 1944.
4. Applicability of Section 11B and 12B of the Central Excise Act, 1944.
5. Validity of the Assistant Director (Cost)'s report and its reliance by the lower authorities.
6. Whether the appellants' refund claim was time-barred.

Detailed Analysis:

1. Whether the appellants passed on the incidence of duty to the buyers, invoking the doctrine of unjust enrichment:

The appellants claimed that the price of Pre-cured Tread Rubber (PCTR) remained the same before and after the imposition of duty, arguing that they did not pass on the incidence of duty to the buyers. However, both the Assistant Collector and the Collector (Appeals) found that the appellants did not provide sufficient documentary evidence to prove that the incidence of duty was not passed on to the buyers. The Assistant Collector noted that the appellants maintained a standard in-built price for all products irrespective of the duty aspect and that the appellants' price list contained an endorsement indicating that any applicable taxes would be extra. The Collector (Appeals) upheld this finding, stating that the appellants' stable pricing was likely due to market constraints rather than an intention not to pass on the duty.

2. Whether the assessments were provisional or final:

The appellants argued that the assessments were provisional, invoking Rule 9B of the Central Excise Rules, 1944. However, the Tribunal found that the assessments were not provisional but were made under protest as per Rule 233B. The appellants paid duty under protest following the procedure laid down in Rule 233B, and the assessments were finalized based on the classification and duty rates applicable at the time. Therefore, the provisions of Rule 9B regarding provisional assessments were not applicable.

3. Whether the appellants provided sufficient documentary evidence to rebut the presumption under Section 12B of the Central Excise Act, 1944:

The appellants submitted affidavits and cost sheets to support their claim that the incidence of duty was not passed on to the buyers. However, the Assistant Collector and the Collector (Appeals) found that these documents were not supported by verifiable evidence. The appellants failed to provide basic documentary evidence like Bin cards, Stores ledger, Production slips, and Material issue slips, which could have substantiated their claim. As a result, the presumption under Section 12B that the incidence of duty was passed on to the buyers was upheld.

4. Applicability of Section 11B and 12B of the Central Excise Act, 1944:

The Tribunal held that the provisions of Sections 11B and 12B were fully applicable to the appellants' case. The Hon'ble Supreme Court in the case of Mafatlal Industries Ltd. v. UOI (1997) upheld the retrospective effect of the amended provisions of Section 11B, making them applicable to all pending applications for refund. The Tribunal found that the appellants did not provide sufficient evidence to rebut the presumption under Section 12B, and therefore, the refund claim was subject to the doctrine of unjust enrichment.

5. Validity of the Assistant Director (Cost)'s report and its reliance by the lower authorities:

The Assistant Director (Cost) provided a detailed report on the cost construction of PCTR, which was relied upon by the Assistant Collector and the Collector (Appeals). The report concluded that the appellants' contention that there was no transfer of the burden of excise duty to the customers was not acceptable. The appellants argued that the report was based on hypothetical calculations and that the entire report was not furnished to them. However, the Tribunal found that the gist of the report was communicated to the appellants, and they did not provide any contrary expert opinion to rebut the findings of the Assistant Director (Cost).

6. Whether the appellants' refund claim was time-barred:

The Tribunal found that the appellants' refund claim was not time-barred as the duty was paid under protest in terms of Rule 233B of the Central Excise Rules, 1944. The protest letter dated 1-7-1986 was acknowledged by the department, and therefore, the question of time limit applicability did not arise in this case.

Conclusion:

The Tribunal upheld the order of the Collector (Appeals) and found that the appellants failed to provide sufficient documentary evidence to rebut the presumption under Section 12B that the incidence of duty was passed on to the buyers. The refund claim was subject to the doctrine of unjust enrichment, and the amount of Rs. 3,52,03,339.93 was rightly ordered to be credited to the Consumer Welfare Fund. The appeal was rejected.

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