2003 (7) TMI 334 - AT - Central Excise

Refund claim - Unjust enrichment - Incidence of duty whether passed on - Remand - Appeal to Appellate Tribunal - New plea

Summary

Issues:

1. Refund of excise duty paid in excess on glass filament.
2. Application of unjust enrichment principle.
3. Interpretation of Section 11B regarding passing on the duty incidence.
4. Finalization of provisional assessment and its impact on refund eligibility.

Issue 1: Refund of excise duty paid in excess on glass filament

The appeal before the Appellate Tribunal concerned the refund of excise duty paid in excess on glass filament manufactured and cleared by the respondent. The Commissioner (Appeals) had held in favor of the respondent, allowing the refund, which was challenged by the Asstt. Commissioner. The Tribunal noted the requirement under Section 11B(2) that the duty incidence must not have been passed on to any other person for the refund to be credited to the Consumer Welfare Fund.

Issue 2: Application of unjust enrichment principle

The Commissioner (Appeals) based the decision on the Bombay High Court judgment in Solar Pesticides, which held that the unjust enrichment provision in Section 11B(2) does not apply to captively consumed goods. However, the Tribunal pointed out that the Solar Pesticides judgment had been overturned by the Supreme Court, emphasizing that the price of the final product alone does not determine if the duty incidence has been passed on. Various factors influence the final product price, and the manufacturer must prove that the duty incidence was not passed on, as mere "strong reason" is insufficient.

Issue 3: Interpretation of Section 11B regarding passing on the duty incidence

The Tribunal highlighted the importance of proving that the duty incidence was not passed on, as per the provisions of Section 11B(2). It noted that the observations of the Supreme Court in Mafatlal Industries case indicated that manufacturers need to demonstrate that duty incidence was not passed on, and a mere assertion of "strong reason" is inadequate. The Tribunal emphasized the need for concrete evidence to support the claim of non-passing on the duty incidence.

Issue 4: Finalization of provisional assessment and its impact on refund eligibility

The respondent argued that the refund became due following the finalization of provisional assessment, citing the Mafatlal judgment to support the exclusion of Section 11B(2) requirement. The Tribunal acknowledged the significance of this legal question and allowed the respondent to make the claim, remanding the matter to the Deputy/Asstt. Commissioner for further consideration. The Tribunal rejected the department's argument that the destruction of certain documents should bar the claim, emphasizing that if the respondent can substantiate the claim with existing documents, it should be considered.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and directing further proceedings regarding the refund claim based on the considerations discussed during the hearing.