2012 (6) TMI 858 - HC - Central Excise

Summary

Issues Involved:
1. Whether refined edible oils in packed form manufactured prior to 1st March 2003 are exigible to excise duty at the rate of 8%.
2. Whether the petitioner is entitled to a refund of the duty paid on such oils.
3. Whether the principle of unjust enrichment applies in this case.

Summary:

Issue 1: Exigibility of Excise Duty on Pre-March 2003 Manufactured Oils
The petitioner, a cooperative society engaged in manufacturing refined edible oils, challenged the order dismissing its appeal for a refund of excise duty paid on oils packed before 1st March 2003. The oils were not excisable prior to this date but became subject to an 8% duty from 1st March 2003 due to the Finance Act, 2003. The petitioner argued that the taxable event of "manufacture" occurred only from 1st March 2003, as packing from bulk to retail was deemed "manufacture" by the Finance Act, 2003. The court, referencing the Supreme Court's decision in Wallace Flour Mills Co. Ltd., held that the taxable event is manufacture, but the duty is related to the date of removal from the factory. Thus, goods manufactured before 1st March 2003 but removed after this date are subject to the 8% duty.

Issue 2: Entitlement to Refund
The petitioner paid the duty under protest and sought a refund, arguing that the oils were not excisable before 1st March 2003. The Assistant Commissioner and the Commissioner (Appeals) rejected the refund claim, stating that the oils were chargeable to duty at the rate prevalent on the date of removal. The court upheld this view, noting that the goods were chargeable to nil duty before 1st March 2003 but became subject to 8% duty upon removal after this date.

Issue 3: Unjust Enrichment
The respondents argued that the petitioner had passed on the duty element to its customers, making a refund unjust enrichment. The petitioner did not contest this in its reply to the show cause notice. The court noted that since the petitioner had passed on the duty to customers, a refund would indeed result in unjust enrichment. The court also dismissed the petitioner's argument that the duty was collected without authority of law, as the oils were chargeable to duty even before the amendment, albeit at a nil rate.

Conclusion:
The court found no infirmity in the orders of the authorities below and dismissed the petition, ruling that the refined edible oils were subject to the 8% duty upon removal after 1st March 2003, and the petitioner was not entitled to a refund due to the principle of unjust enrichment. The petition was dismissed with no order as to costs.