2010 (2) TMI 1236 - AT - Central Excise

Whether Copper Cathode (cut) so used in pipe and launders were required to pay duty or eligible for the exemption under Notification No. 67/95-C.E., dated 16-3-95? Held that - In the present case, undisputedly, the prices of the final products are being determined on the basis of ruling LME prices. In my considered view, the question of passing on the duty burden in such a situation, to the buyers cannot be arise - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of Notification No. 67/95-C.E. regarding duty exemption for Copper Cathode.
2. Application of the principle of unjust enrichment in cases of captive consumption.
3. Determination of duty burden when final product prices are based on ruling LME prices.

Analysis:
1. The appeal involved a dispute regarding the duty liability on Copper Cathode used in the manufacture of specific products. The Tribunal had previously ruled in favor of the appellants regarding duty exemption under Notification No. 67/95-C.E. dated 16-3-95. However, subsequent to paying duty during 2004-2005, the appellants sought a refund based on the Tribunal's earlier decision.

2. The Commissioner (Appeals) reviewed the refund claim and disallowed it, citing the principle of unjust enrichment. Referring to legal precedents such as Union of India v. Solar Pesticides Ltd. and C.C. (Import) Mumbai v. Godrej & Boyce Mfg. Co., the Commissioner found that unjust enrichment applies to captive consumption and capital goods. The Commissioner held that the duty exemption claim was not valid due to the doctrine of unjust enrichment, as the duty burden was not proven to be absorbed by the appellants.

3. The appellants argued that they did not pass on the duty burden to consumers as their final product prices were determined based on ruling LME prices, not the cost of inputs. Citing the Tribunal's decision in Commissioner of Central Excise, Bangalore v. Mahaveer Polypacks, the appellants contended that if final product prices are not influenced by intermediate product valuation, the duty burden passing on does not arise.

4. In the final judgment, the Tribunal considered the pricing mechanism of the final products based on LME prices. It concluded that since the duty burden was not passed on to buyers due to pricing determined by LME prices, the doctrine of unjust enrichment did not apply in this case. The Tribunal set aside the Commissioner (Appeals) order and allowed the appeal, providing consequential relief in accordance with the law.

This detailed analysis highlights the key legal interpretations, precedents, and arguments considered in the judgment, leading to the final decision in favor of the appellants.