2008 (1) TMI 696 - AT - Central Excise

Refund - Unjust enrichment - Held that - the uniformity in price before and after assessment is not sufficient to conclude that the duty burden has not been passed on to customers - refund claim is hit by unjust enrichment.

Summary

Issues Involved:
Claim for refund on cookies and brownies - Bar of unjust enrichment - Interpretation of duty burden passing on to buyers - Application of legal precedents - MRP assessment and its impact on unjust enrichment.

Analysis:
The case involved the Assistant Commissioner dropping proceedings against the appellants under a show cause notice for the rejection of a refund claim on cookies and brownies, subsequently sanctioning the refund amount. However, the Commissioner (Appeals) allowed the Revenue's appeal, citing unjust enrichment as the reason for rejecting the claim. The appellants challenged this decision, leading to the current appeal.

The Commissioner (Appeals) based the decision on the Apex Court's ruling in Allied Photographics, emphasizing that uniformity in price before and after assessment does not automatically imply that the duty burden has not been passed on to the buyer. The higher duty paid by the assessees, recorded as expenditure in the profit and loss account, indicated the passing on of duty burden to buyers. Referring to the Rajasthan Spinning and Weaving Mills case, the Tribunal held that booking duty in the profit and loss account demonstrates passing on the duty burden. The chartered accountant's certificate filed by the appellants was considered, but the contention that MRP assessment fixed the price and eliminated unjust enrichment was rejected. The Commissioner (Appeals) concluded that despite fixed prices under MRP assessment, the duty burden could still pass on to buyers, aligning with the legal position that price uniformity pre and post-assessment does not negate duty passing on.

The appellate tribunal upheld the Commissioner (Appeals)'s decision, agreeing that the refund claim was affected by unjust enrichment. The judgment emphasized the significance of legal precedents and the interpretation of duty burden passing on to buyers, particularly in the context of MRP assessment and its impact on unjust enrichment considerations. The ruling reaffirmed the principle that price consistency pre and post-assessment does not automatically absolve the duty burden passing on to customers, thereby supporting the rejection of the refund claim based on unjust enrichment grounds.