1999 (8) TMI 915 - AT - Central Excise

Summary

Issues:
The issues involved in this case are the effective date of duty rate enhancement, the doctrine of unjust enrichment, and the burden of proof regarding passing on the duty to customers.

Effective Date of Duty Rate Enhancement:
The appellants, as manufacturers of polyester filament yarn, had been paying duty at a certain rate until a Notification was issued enhancing the duty rate. The Notification was brought to the notice of both the Revenue and the assessee on different dates. The officers debited the enhanced duty differential in two instalments. The lower appellate authority held that the enhanced duty rate would be effective only from the date the Notification was made public. The refund claim was rejected based on unjust enrichment, as the burden of duty passing to customers was not proven. The Tribunal observed that duty was paid at the lower rate during clearance, and the duty debited later could not be presumed to have been passed on to customers. The appeal was allowed, and refund directed to be paid to the appellants.

Doctrine of Unjust Enrichment:
The Revenue rejected the refund claim based on the doctrine of unjust enrichment, requiring evidence that the burden of duty had not been passed on to customers. The appellants argued that as the goods were under physical control, cleared at the lower rate, and sold before duty debiting, no higher burden was passed on. The Tribunal found that only the lower burden of duty assessed and paid at clearance could be passed on, not the duty debited later. The presumption of Section 12B, which assumes duty is passed on unless proven otherwise, was not applicable in this case. The appeal was allowed as no evidence supported the Revenue's claim of passing on the duty burden.

Burden of Proof Regarding Passing on Duty to Customers:
The Revenue contended that the burden of proof under Section 12B had not been discharged by the appellants, as they could have raised debit notes passing on the duty burden. The Tribunal noted that duty was paid at the lower rate during clearance, and the duty debited later could not be presumed to have been passed on. The appellants successfully argued that no higher burden was passed on to customers, and the appeal was allowed based on lack of evidence supporting the Revenue's claim. Refund was directed to be paid promptly due to the age of the appeal.