2010 (10) TMI 445 - AT - Central Excise

Refund - Unjust enrichment - Proof - Issued proposing to reject the claim on the ground that the incidence of duty was passed on by them to their buyers - The certificate stated to have been issued by the Chartered Accountant as well as the certificate stated to have been issued by the buyers it was sought to be contended that the same clearly disclose that the incidence of excise duty was not passed over to the buyers - The certificate by the Chartered Accountant having been issued on the basis of the account books maintained by the appellants, the same read with the balance sheet of the appellants for the relevant period it would apparently disclose that the amount of excise duty was not recovered from the buyers and, therefore, it was refundable by the department - The Chartered Accountant s certificate would be a corroborative piece of evidence - But the corroborative piece of evidence cannot be itself a main piece of evidence regarding the fact which is required to be proved by the party - Proof regarding non-collection of the duty is established by cogent evidence, mere recording of the amount being recoverable in the account books that itself cannot be a proof of fact of non-collection of duty - Hence, the impuged order is held - Decided against of assessee.

Issues Involved
1. Refund claim of excise duty amounting to Rs. 32,65,057/-.
2. Application of the principle of unjust enrichment.
3. Adequacy of evidence provided by the appellants to prove non-transfer of duty incidence to buyers.
4. Reliance on certificates from Chartered Accountant and buyers.
5. Relevance of previous judgments cited by both parties.

Issue-Wise Detailed Analysis

1. Refund Claim of Excise Duty Amounting to Rs. 32,65,057/-

The appellants, manufacturers of Liquefied Petroleum Gas (LPG), filed a refund claim for Rs. 32,65,057/-. The Assistant Commissioner sanctioned the refund but ordered it to be credited to the consumer welfare fund, citing the principle of unjust enrichment. The Commissioner (Appeals) upheld this decision.

2. Application of the Principle of Unjust Enrichment

The principle of unjust enrichment was applied by the authorities, leading to the refund being credited to the consumer welfare fund. The authorities concluded that the appellants had passed on the duty incidence to their buyers, thereby invoking Section 12B of the Central Excise Act, 1944.

3. Adequacy of Evidence Provided by the Appellants to Prove Non-Transfer of Duty Incidence to Buyers

The appellants argued that the authorities failed to consider the documentary evidence properly. They submitted certificates from a Chartered Accountant and buyers, claiming these demonstrated that the duty incidence was not passed on. However, the authorities and the Tribunal found these documents insufficient. The Tribunal emphasized that the burden of proof lies heavily on the assessee to establish that the duty incidence was not transferred to the buyers. The appellants failed to provide detailed documentary evidence, such as invoice-wise comparisons, to substantiate their claim.

4. Reliance on Certificates from Chartered Accountant and Buyers

The appellants presented a certificate from a Chartered Accountant stating that the excise duty amount was not recovered from the buyers and was outstanding in their books. The Tribunal found that this certificate did not explicitly prove non-collection of duty from buyers. Similarly, certificates from buyers were deemed irrelevant as they lacked legal sanctity. The Tribunal highlighted that such facts should be established through affidavits or direct evidence from individuals with direct knowledge of the transactions.

5. Relevance of Previous Judgments Cited by Both Parties

The appellants cited several judgments to support their case, including:
- R.C.C. (Sales) Pvt. Ltd. v. CCE, Hyderabad-IV: The Tribunal distinguished this case, noting that in the cited case, the Chartered Accountant's certificate clearly stated that the duty element was not passed on to customers, unlike in the present case.
- Polyglass Acrylic Mfg. Co. (P) Ltd. v. CCE, New Delhi: This case was also distinguished as the Chartered Accountant's certificate in the cited case provided clear evidence, which was not the situation in the present case.
- Flow Tech Power v. CCE, Coimbatore: The Tribunal noted that the cited case involved a clear certification that the duty was absorbed by the assessee, which was not provided in the current case.
- Paper Products Ltd. v. Commr. of Cus. (Import), Mumbai-I: The Tribunal found this case inapplicable as the Chartered Accountant's certificate in the present case did not meet the necessary criteria.
- Laxmi Steel Industries v. CCE, Kanpur: This case was based on R.C.C. (Sales) Pvt. Ltd., which the Tribunal had already distinguished.
- Modern Syntex Ltd. v. CCE, Jaipur: The Tribunal noted that the decision was based on non-controverted facts, unlike the present case.
- Oswal Cotton Spinning Mills v. Collector of C. Ex., Chandigarh: The Tribunal observed that the cited case involved substantial evidence, which was lacking in the present case.

The departmental representative cited:
- Gomathi Engineering Service v. Collector of C. Excise, Coimbatore: The Tribunal agreed with the relevance of this case, where failure to produce adequate evidence led to the rejection of the refund claim.
- Hanil Era Textiles Ltd. v. CCE, Raigad: The Tribunal found this case relevant as it held that a Chartered Accountant's certificate alone was insufficient to discharge the burden of proof.

Conclusion

The Tribunal concluded that the appellants failed to provide sufficient evidence to prove that the duty incidence was not passed on to the buyers. The appeal was dismissed, and the order to credit the refund to the consumer welfare fund was upheld.

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