2014 (12) TMI 1177 - AT - Central Excise

Refund - unjust enrichment - During pendency of the appeal before the Tribunal the appellant had deposited the Central Excise duty under protest - The appellant was all along contesting the issue of leviability of Central Excise duty on the cost of secondary packing with the Central Excise department. - Held that - The duty paid on the secondary packing has been accounted for by the appellant under the heading Loans and Advances in the Balance Sheet as receivable from the Central Excise department. M/s. Damle Dhandhania & Co. Chartered Accountants upon verification of the Books of Accounts maintained by the appellant in their certificate dated 14-8-2009 has also endorsed the said fact. As held by Hon ble Rajasthan High Court in the case of UOI v. A.K. Spintex 2008 (11) TMI 89 - RAJASTHAN HIGH COURT the presumption under Section 12B is a rebuttable presumption and once the assessee produces evidence in support of his claim of having not passed on the incidence of duty whose refund is claimed to the customers the burden of proof would shift to the Department to prove that the claim of the assessee is false - Refund allowed.

Summary

Issues:
Applicability of the doctrine of unjust enrichment to the refund application.

Analysis:

Issue: Applicability of the doctrine of unjust enrichment to the refund application

The case involved an appeal against the rejection of a refund claim by the Commissioner of Central Excise (Appeals), Lucknow, on the grounds of unjust enrichment. The appellant, a manufacturer of flashlights, had not included the cost of secondary packing in the value of torches for Central Excise duty payment during a disputed period. The appellant subsequently paid the duty under protest and filed a refund claim after a favorable decision by the Tribunal. The central issue for consideration was whether the doctrine of unjust enrichment applied to the refund application.

The Tribunal analyzed Section 11B of the Central Excise Act, 1944, which governs refund applications. It noted that the burden of proof lies on the claimant to demonstrate that the duty incidence was not passed on to any other person. The Act presumes that duty is passed on to buyers, but this presumption can be rebutted by the claimant. In this case, the appellant had not recovered the protest duty from customers and accounted for it as recoverable from the Central Excise department in their balance sheet. The Chartered Accountant's certificate confirmed this fact, indicating that the duty burden was borne by the appellant and not passed on.

The Tribunal referred to a decision by the Hon'ble Rajasthan High Court, which emphasized that the presumption under Section 12B is rebuttable, and the burden shifts to the Department to disprove the claim of non-passing on the duty incidence. Since the Department failed to provide evidence contradicting the appellant's position, the Tribunal held that the rejection of the refund claim based on unjust enrichment was unjustified. The Tribunal also cited various decisions supporting the appellant's stance.

Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant, granting consequential relief.

This detailed analysis of the issues involved in the judgment showcases the Tribunal's thorough examination of the applicability of the doctrine of unjust enrichment to the refund claim, highlighting the legal principles and evidentiary requirements essential in such cases.