2005 (2) TMI 610 - AT - Central Excise

Summary

Issues:
Refund of excise duty erroneously paid and the application of the principle of unjust enrichment.

Analysis:
The appellant, a non-profit organization, erroneously paid duty at a 4% rate on intraocular lenses even though the goods were not liable to duty under the tariff. The appellant sought a refund after the rescission of the relevant notification. The lower authorities ordered the deposit of the refund amount in the Consumer Welfare Fund instead of reimbursing the appellant, citing the need to prove that the duty amount had not been passed on to buyers.

The appellant argued that they absorbed the excise duty liability during the period when duty was paid, satisfying the requirement of unjust enrichment. The contention was supported by a letter to buyers stating the reduction in price to absorb the excise duty. The appellant maintained a consistent price before, during, and after the duty period.

The Departmental Representative (DR) contended that showing duty and price separately in invoices during the relevant period did not prove that duty was not passed on to buyers. Citing precedent, the DR argued that uniformity in pricing did not negate the passing on of duty, referring to a judgment by the Apex Court.

Upon review, the Tribunal found that the objective satisfaction required was that the duty amount had not been passed on. The appellant's actions, such as promptly informing buyers about price reduction to absorb excise duty, indicated non-passing of duty liability. The Tribunal noted that separately indicating duty in invoices did not confirm passing on of duty, as it was done to show price components. Lack of contrary evidence from the revenue supported the finding that duty liability was not passed on. Consequently, the appeal was allowed, granting consequential relief to the appellant.