1998 (11) TMI 607 - AT - Central Excise

Summary

Issues involved: Refund claim of excise duty, unjust enrichment, interpretation of Notification No. 129/94-C.E., duty element in final price, applicability of Tribunal's decisions.

Refund Claim of Excise Duty: The appellant, a Co-operative Spinning Mills, filed a refund claim for duty excess paid on yarn during a specific period. The yarn in question was exempted by Notification No. 129/94-C.E. dated 7-9-94, but the appellant continued to clear it on payment of duty until 6-12-94. The refund claim was rejected on grounds of unjust enrichment as the duty element was not shown separately in final invoices, and it was deemed to have been recovered from buyers. The Commissioner's appeal upheld this decision, leading to the appeal before the Tribunal.

Unjust Enrichment Argument: The appellant argued that they were bound by a Yarn Committee's pricing policy, which exempted certain buyers from paying Central Excise duty. They contended that regardless of duty payment, the fixed pricing meant the duty burden was not passed on to buyers. Supporting their stance with relevant case law, they emphasized that the duty element did not affect the final sale price, thus denying unjust enrichment.

Interpretation of Tribunal's Decisions: The Tribunal considered previous rulings, including the Metro Tyres case, to determine the applicability of unjust enrichment in the present case. It was noted that the duty element not being separately shown in invoices did not automatically imply passing on the duty burden to buyers. The fixed pricing by the Yarn Committee further supported the appellant's position that the duty payment did not impact the final price, thus rejecting the unjust enrichment argument.

Conclusion: In light of the arguments presented and the precedents cited, the Tribunal ruled in favor of the appellant, allowing the appeal and granting consequential relief. The doctrine of unjust enrichment was deemed inapplicable to the case due to the specific circumstances and pricing regulations outlined by the Yarn Committee, leading to the decision to refund the excess duty paid by the appellant.