2004 (9) TMI 475 - AT - Central Excise

Summary

Issues:
1. Availability of concessional rate of duty under Notification No. 38/78-Cus for imported goods.
2. Claim for refund of excess duty paid.
3. Application of unjust enrichment clause under Section 11B.
4. Bar of limitation for recovery of erroneously granted refund.
5. Burden of proof on passing on duty incidence to buyers.

Analysis:

1. The case involved the appellants engaged in manufacturing conveyor belts using imported Industrial Nylon Yarn under a concessional duty rate, disputed by the department as Nylon Tyre Cord. The Tribunal previously ruled in favor of the appellants, allowing the concessional rate. A subsequent claim for refund was made, which was initially approved by the Deputy Commissioner with a condition related to a potential reversal by the Supreme Court in a relevant case.

2. The Commissioner (Appeals) intervened, remanding the matter to ascertain if duty incidence was passed on to customers. The Supreme Court later reversed a previous High Court judgment, applying the unjust enrichment bar to captive consumption cases. Consequently, a show cause notice was issued proposing recovery of the refund, but the Assistant Commissioner dropped the proceedings based on the earlier adjudication order.

3. The Commissioner (Appeals) determined that the refund was subject to the unjust enrichment clause of Section 11B, directing the sanctioned refund to be credited to the Consumer Welfare Fund. The appellants challenged this decision, leading to the current appeal.

4. The preliminary objection regarding the limitation for recovery of erroneously granted refund was overruled based on a Supreme Court ruling that limitation does not apply when the law changes due to subsequent judgments. The focus then shifted to whether the refund was impacted by the doctrine of unjust enrichment.

5. The Commissioner (Appeals) found that the appellants failed to prove that duty incidence was not passed on to buyers, emphasizing the burden of proof under Section 11B. The decision was upheld, as the appellants did not provide sufficient evidence to show that duty burden was not included in the selling price of finished goods, leading to the rejection of the appeal.