2009 (11) TMI 681 - AT - Central Excise

Refund claim - unjust enrichment - Held that - the receipt of payment of value of the goods or the duty component is not a determining factor for deciding whether the duty burden has been passed on or not - appeal rejected - decided against appellant.

Summary

Issues:
Appeal against the order of the Commissioner setting aside a refund of excise duty based on Notification No. 30/2004-C.E. dated 9-7-2004, regarding the passing of duty burden to buyers.

Analysis:
The appellant, a manufacturer of woollen worsted yarn, cleared goods on payment of excise duty under Chapter Sub-Heading 51.07 of CETA, 1985. The appellant claimed eligibility for a refund under Notification No. 30/2004-C.E. dated 9-7-2004, asserting that they erroneously paid duty as buyers objected to it and did not pay the excise duty portion to them. The original authority sanctioned the refund, but the Commissioner (Appeals) set it aside. The appellant argued that they did not pass on the duty burden to buyers as they issued credit notes and buyers were not registered for Cenvat credit. The appellant cited legal precedents to support their case.

The Department contended that once duty was mentioned in the invoices, buyers could pass on the burden downstream, and issuing credit notes later did not negate this. The Tribunal examined whether the duty burden was actually passed on to buyers. It noted that the appellant paid duty at clearance and issued invoices with duty details. Mere objections from buyers and subsequent credit notes were deemed insufficient proof that the duty burden was not passed on. The Tribunal referenced the Sangam Processors case, affirmed by the Supreme Court, to support the Department's position.

The Tribunal dismissed the appellant's claim that non-receipt of duty payment indicated non-passing of duty burden, stating it was irrelevant to the issue. The Tribunal emphasized that receiving payment did not determine if the duty burden was passed on. Consequently, the Tribunal rejected the appeal, finding no merit in the appellant's arguments. The decision was based on the lack of sufficient evidence to prove that the duty burden was not transferred to the buyers despite objections and credit notes issued later.