2012 (8) TMI 1088 - HC - Central Excise

Summary

Issues Involved:
1. Legality of excise duty collection and retention at a higher rate.
2. Delay in filing refund application.
3. Principles of unjust enrichment.
4. Requirement of personal hearing by the deciding authority.

Summary:

1. Legality of Excise Duty Collection and Retention:
The petitioner, a partnership firm, challenged the rejection of their refund requests for duty paid u/s the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956. The petitioner argued that their product, "Mixture Carminative Prop.", should be charged at a reduced duty rate under Item No. 1(ii)(a) instead of the higher rate under Item No. 1(ii)(b). The High Court had previously ruled that without categorizing the preparations, the government could not collect higher duty. The Supreme Court dismissed the Government's Special Leave Petition, affirming the need for categorization before collecting higher duty. Despite this, the petitioner continued to deposit duty at a higher rate and delayed providing samples for categorization, which was finally done in 1990, classifying the product under Item No. 1(ii)(b).

2. Delay in Filing Refund Application:
The petitioner filed for a refund in July 1994 for the period between 1987 to 1990. The application was dismissed due to the delay and the final classification of the product under Item No. 1(ii)(b). The petitioner's continued payment of higher duty despite the court's judgment and the delayed provision of samples contributed to the rejection of the refund claim.

3. Principles of Unjust Enrichment:
The Commissioner indicated that the burden of excise duty was passed on to the consumer, invoking the principle of unjust enrichment. The petitioner failed to provide satisfactory evidence to counter this claim. The court emphasized that refund claims for indirect taxes like excise duty require proof that the burden was not passed on to consumers, aligning with the Supreme Court's stance in Mafatlal Industries Ltd. v. Union of India.

4. Requirement of Personal Hearing by the Deciding Authority:
The petitioner contended that the Commissioner who decided the refund application was not the one who heard it, violating the principle that "one who hears must decide." The court referenced multiple judgments, including General Manager, Eastern Railway v. Jawala Prosad Singh, indicating that a change in personnel does not necessarily violate natural justice principles, especially when the decision is based on written records.

Conclusion:
The petitions were dismissed on grounds of delay, lack of evidence against unjust enrichment, and procedural compliance by the authorities. The court found no merit in the petitioner's claims and upheld the decisions of the lower authorities.