2015 (3) TMI 1223 - HC - Central Excise

Refund - Excess payment of duty due to discounts - Held that - As regards the Revenue s contention that the discounts are always relatable to value and not to duty, we find no merits. Admittedly, the discounts would be relatable to value only but would be having effect on the quantum of duty. If the discounts are given, the value would be lowered resulting in assessees liability to pay reduced duty in which case, if the assessee has paid back the excess duty to the customers, he would be entitled to the refund of the same. Unjust enrichment - Held that - provisions of unjust enrichment are not applicable to the present case since the duty of excise claimed to be excess paid in the instant appeal has been credited back to the buyers account by the appellant by way of issuing the credit notes. However, the adjudicating authority shall allow the refund of duty, as admissible, after due verification of all the credit notes and relevant accounting ledgers to ascertain that burden of duty has not been passed on by the appellant to their customers. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Challenge to admissibility of discounts in remand proceedings.
2. Justification of refund claims not being hit by the bar of unjust enrichment.

Analysis:

Issue 1: Challenge to admissibility of discounts in remand proceedings
The central excise appeal was filed by the Commissioner of Central Excise and Service Tax against the Final Order passed by the Customs, Excise & Service Tax Appellate Tribunal. The department raised a question of law regarding the admissibility of discounts in remand proceedings. The Tribunal clarified that discounts, though related to value, impact the quantum of duty. If excess duty was paid and later refunded to customers due to discounts, the assessee would be entitled to a refund. The Tribunal emphasized that the legal issues raised are subject to verification by the lower authority, as the matter had been remanded. Ultimately, the Court found no question of law arising in the present case and dismissed the appeal filed by the department.

Issue 2: Justification of refund claims not being hit by the bar of unjust enrichment
In the order of the Commissioner (Appeals) Customs, Central Excise & Service Tax, it was noted that the duty claimed to be excess paid had been credited back to the buyers by issuing credit notes. The Commissioner held that unjust enrichment provisions were not applicable since the burden of duty had not been passed on to customers. The Tribunal set aside the refund sanctioning authority's order and allowed the appeal filed by the appellant on the mentioned terms. The Tribunal clarified that the legal issues regarding unjust enrichment needed verification by the lower authority. The Court, after considering the directions and facts of the case, concluded that no question of law arose and dismissed the appeal filed by the department.

In conclusion, the judgment addressed the issues of challenging discounts in remand proceedings and justifying refund claims not being hit by unjust enrichment. The Court emphasized the impact of discounts on duty payments and the need for verification by the lower authority in such cases. Ultimately, the appeal filed by the department was dismissed based on the findings and directions provided in the orders of the Commissioner and the Tribunal.