2006 (1) TMI 297 - AT - Central Excise

Summary

Issues:
- Denial of refund claim on the ground of unjust enrichment.

Analysis:
The case involves an appeal against the denial of a refund claim amounting to approximately Rs. 1.3 lakhs based on the concept of unjust enrichment. The Commissioner (Appeals) had rejected the refund claim, stating that the duty liability had been passed on by the appellant to the buyer through the invoice issued at the time of sale, making the amount non-refundable.

The Appellant, a Public Sector Undertaking engaged in manufacturing and distributing LPG, cleared LPG on specific dates in question. The claim for refund was made due to a reduction in the price of LPG by the Government, which the appellant was unaware of until after the clearance of the LPG at the higher price. The argument presented was that although the invoices reflected the higher amount, including duty, the payment was actually made by the buyers at the revised, lower price, which included the reduced duty. Certificates from the buyers were submitted as evidence confirming payment at the reduced rates.

Upon careful examination of the records and arguments from both sides, the Tribunal emphasized that the mere issuance of an invoice does not constitute passing on of the duty liability. Passing on occurs only when the duty is paid by the recipient of the goods as indicated in the sale document. In this case, the continuous transactions between the parties showed that payments were settled post the supply of goods mentioned in the invoice, with certificates from the buyers explicitly indicating payment, including central excise duty, at the reduced prices. Consequently, it was established that the higher duty amount was not passed on, thereby rendering the provision regarding unjust enrichment inapplicable to the appellant's situation.

As a result of the above analysis, the impugned order denying the refund claim was overturned, and the appeal was allowed in favor of the appellant, granting consequential relief.