2011 (1) TMI 741 - AT - Central Excise

Rejection of refund claim on the ground of unjust enrichment. - Held that - A conjoint reading of the certificates issued by the CA and Tirupur Industrial Wastewater Recycling Company Limited, clearly goes to show that the appellant have discharged the duty burden and they have not passed on the incidence of duty. The veracity of these certificates has not been challenged by the department at any stage. decided in favour of Assessee.

Summary

Issues Involved:
1. Rejection of refund claim on the grounds of unjust enrichment.
2. Verification of the Chartered Accountant's certificate as directed by the Tribunal.
3. Evaluation of whether the duty burden was passed on to the customers.

Detailed Analysis:

1. Rejection of Refund Claim on Grounds of Unjust Enrichment:
The appellant filed a refund claim for Rs. 2,93,855/- for the duty paid on Electro Magnetic Flow Meters supplied to a project in Tirupur, which was exempted from duty under Notification No. 3/2004-C.E. The refund claim was rejected by the lower adjudicating authority and upheld by the Commissioner (Appeals) on the grounds of unjust enrichment. The Commissioner (Appeals) concluded that the appellant failed to prove that the duty burden was not passed on to the customers, despite the appellant producing a Chartered Accountant's certificate and a certificate from the project authorities.

2. Verification of the Chartered Accountant's Certificate as Directed by the Tribunal:
The Tribunal had previously remanded the case to the Commissioner (Appeals) specifically to verify the Chartered Accountant's certificate. The Commissioner (Appeals), however, instead of merely verifying the certificate, re-evaluated the entire case and concluded that the Chartered Accountant's certificate alone was insufficient to prove that the duty burden was not passed on, citing various case laws. This action was deemed a breach of judicial discipline, as the Commissioner (Appeals) was only supposed to verify the certificate as per the Tribunal's directive.

3. Evaluation of Whether the Duty Burden Was Passed on to the Customers:
The appellant argued that they bore the duty burden themselves and did not pass it on to the project authorities, supported by the Chartered Accountant's certificate and a certificate from Tirupur Industrial Wastewater Recycling Company Limited. The department contended that the duty amount debited as an expense in the Profit & Loss Account indicated that the burden was passed on to the customers. The Tribunal noted that the appellant was neither a manufacturer nor used the goods for captive consumption, distinguishing this case from those cited by the department.

Conclusion:
The Tribunal found that the appellant had satisfactorily demonstrated, through the Chartered Accountant's certificate and the project authority's certificate, that the duty burden was not passed on to the customers. The veracity of these certificates was not challenged by the department. Consequently, the Tribunal set aside the impugned order, allowing the appeal and granting the refund claim.