2010 (5) TMI 730 - AT - Central Excise

Summary

Issues involved: Refund claim under Compounded Levy; Unjust enrichment; Duty liability passed on to customer.

The Appellate Tribunal CESTAT AHMEDABAD considered a case where M/s. Devi Synthetics, engaged in textile fabric manufacturing, filed a refund claim under the Compounded Levy system. The dispute arose when the Revenue appealed against the allowance of the refund claim by the lower authorities.

The Commissioner (Appeals) and the original adjudicating authority supported the refund claim by emphasizing that there was no unjust enrichment. They based their decision on the mode of duty payment, which was not consignment-wise but according to the fixed annual capacity, and a Chartered Accountant's certificate confirming that the duty element was not passed on to customers. However, the Revenue contended that this evidence was insufficient and claimed that the duty liability had indeed been transferred to the customer.

The learned SDR representing the Revenue cited precedents, including the cases of M/s. K.B. Rolling Mills and M/s. Shivagrico Implements Ltd., to argue that even under compounded levy, the principle of unjust enrichment must be addressed. The lower authorities did not explicitly rule out the application of the unjust enrichment clause but approved the refund claim based on the Chartered Accountant's certificate and the payment method linked to the annual capacity.

In the judgment, it was noted that the procedure followed by the lower authorities was appropriate, and there was no error found in their approach. The duty element was not separately indicated in the invoices, and the method employed by the respondent, based on the fixed annual capacity, was deemed acceptable. Consequently, the Revenue's appeal was dismissed, affirming the decision in favor of M/s. Devi Synthetics.