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2010 (8) TMI 727 - AT - Central ExciseUnjust enrichment - capital goods - appellants filed their refund claim on the ground that amount was paid by them in excess of duty on PVC Conveyor Belt purchased - held that - the Larger bench of the Tribunal in SRF Limited case (2005 -TMI - 49030 - CESTAT, NEW DELHI) has clearly ruled that the doctrine of unjust enrichment is attracted in cases of claim for refund of duty paid on the capital goods. Besides, the decision of the Apex Court in Raj Industries (1999 -TMI - 45464 - SUPREME COURT OF INDIA) is essentially with reference to Section 27 of the Customs Act, 1962 which is in pari materia with Section 11B of the Central Excise Act, 1944 and the decision reiterates the ruling in Mafatlal Industries case. In Oswal Chemicals & Fertilizers (Guwahati) case (2004 -TMI - 52975 - CESTAT, NEW DELHI), there was specific finding that while fixing the price, Ministry had taken into account only the concessional rate of duty on the naptha. As already observed above, there was no material placed before the authorities below or in the appeal which could disclose that the Ministry of Energy, Department of Coal had not taken into consideration the element of duly while fixing the coal price. Refund claim rejected - Decided against the assessee.
Issues Involved:
1. Applicability of the principle of unjust enrichment to the refund of duty paid on capital goods. 2. Inclusion of duty element in the price fixation of coal under the Government notification. 3. Impact of capital goods being non-consumable on the cost of the final product. 4. Effect of the appellant's financial losses on the passing of the duty burden to consumers. Issue-wise Detailed Analysis: 1. Applicability of the principle of unjust enrichment to the refund of duty paid on capital goods: The Tribunal examined whether the principle of unjust enrichment applies to the refund of duty paid on capital goods. Section 11B of the Central Excise Act, 1944, does not differentiate between duty paid on final products, inputs, or capital goods. The provision mandates that any refund claim must be accompanied by evidence showing that the duty incidence was not passed on to any other person. The Tribunal emphasized that even if the capital goods do not form part of the final product, it is essential for the assessee to establish that the duty paid was not included in the sale price of the final product. The Tribunal noted that the appellants failed to provide evidence to prove that the duty burden was not passed on to the consumers, thereby upholding the principle of unjust enrichment. 2. Inclusion of duty element in the price fixation of coal under the Government notification: The appellants argued that the price of coal was fixed by the Government without considering the duty element. However, the Tribunal found no evidence in the notification dated 8-1-1986 or in the Coal Study 1992 to support this claim. The notification merely listed prices based on grade specifications without indicating whether the duty element was included or excluded. The Tribunal concluded that the appellants did not substantiate their claim that the duty element was excluded from the price fixation by the Government. 3. Impact of capital goods being non-consumable on the cost of the final product: The appellants contended that since the capital goods (PVC Conveyor Belt) were non-consumable and did not form part of the final product, the duty element should not be included in the cost of the final product. The Tribunal rejected this argument, stating that the non-consumable nature of capital goods does not automatically exclude the duty element from the sale price of the final product. The Tribunal reiterated that the burden of proof lies on the assessee to demonstrate that the duty paid on capital goods was not passed on to the consumers, which the appellants failed to do. 4. Effect of the appellant's financial losses on the passing of the duty burden to consumers: The appellants argued that their financial losses indicated that they did not pass the duty burden to consumers. The Tribunal dismissed this argument, stating that financial losses do not create a presumption that the duty burden was not passed on. The Tribunal referred to the Supreme Court's ruling in Mafatlal Industries v. Union of India, which held that the question of whether the duty burden was passed on is a factual matter that must be established with evidence. The appellants failed to provide such evidence, and therefore, their claim was not supported. Conclusion: The Tribunal dismissed the appeal, upholding the principle of unjust enrichment and emphasizing the necessity for the appellants to provide concrete evidence that the duty burden was not passed on to consumers. The Tribunal found no merit in the appellants' arguments regarding the exclusion of duty elements in price fixation, the non-consumable nature of capital goods, and financial losses. The decision of the lower authorities to reject the refund claim was affirmed.
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