2008 (7) TMI 702 - AT - Central Excise

Refund - Unjust enrichment - Held that - when the gate passes show that the duty has been recovered, the incidence of duty has to be held as being passed on to the customers - refund allowed.

Summary

Issues:
Denial of refund on grounds of unjust enrichment.

Analysis:
The case involved the denial of a refund claimed by the appellants amounting to Rs. 20,78,502.03 on the basis of unjust enrichment. The appellants were engaged in packing duty paid corn flour, initially considering it non-excisable but later classified it as dutiable under Chapter Heading 1909.19. They paid excise duty under protest from July 1989 to May 1991. Subsequently, their product was deemed non-excisable, and they filed a refund claim which was rejected due to unjust enrichment. The matter underwent various proceedings, including writ petitions in the Bombay High Court. The High Court directed the revenue to deposit the refund claim, which was withdrawn by the appellants. However, the refund claim was again rejected on the grounds of unjust enrichment by the Assistant Commissioner, upheld by the Commissioner (Appeals).

The appellants argued that the duty incidence was not passed on to customers as the price remained the same before and after the imposition of duty, supported by invoices. They submitted a certificate from a Chartered Accountant certifying the amount in question was lying as advance in their books. However, they could not demonstrate the treatment of the recovered excise duty in their balance sheets for relevant years. Both lower authorities and the Commissioner (Appeals) referred to gate passes showing duty recovery from customers. The appellants admitted the duty was included in the price reflected in commercial invoices. The Tribunal held that once gate passes indicated duty recovery, there was no need to examine the balance sheets. As the duty was recovered from customers, the incidence of duty was deemed passed on, upholding the Commissioner (Appeals) order and rejecting the appeal.

In conclusion, the Tribunal upheld the denial of the refund claim on grounds of unjust enrichment, as evidenced by gate passes showing duty recovery from customers, indicating the passing on of duty incidence. The appellants' argument that the price remained unchanged before and after duty imposition was not sufficient to rebut the revenue's claim without additional financial records.