2011 (3) TMI 985 - AT - Central Excise

Refund Claim - deduction of trade discounts given to the distributors - Unjust enrichment - The said refund claims have been sanctioned by the original adjudicating authority but ordered to be deposited in the consumer welfare fund on the ground that the appellants have not been able to establish that the duty has not been recovered by them from their customers - Assessee paid duty under protest and the price lists were also provisional on account of litigation - The Tribunal s decision in the case of CCE Vadodara Vs. Alembic Ltd. (2008 -TMI - 32294 - CESTAT, AHMEDABAD) in which an identical issue was considered and it was held that there being no statutory requirement that commercial invoices should show break up of the value and the duty element not passed on, on account of the quantity discounts, the assessee is entitled to the refund - As such, it deem proper to set aside the impugned order and remand the matter to original adjudicating authority for fresh decision after taking into account the appellant s contentions - The appeal is thus allowed by way of remand.

Summary

Issues:
1. Refund claim related to trade discounts given to distributors
2. Unjust enrichment
3. Duty recovery from customers

Analysis:
The judgment by the Appellate Tribunal CESTAT, Ahmedabad, involved a dispute concerning a refund claim of Rs.11,99,441 filed by the appellant, a manufacturer of PP Medicines, for the period from 1979 to 1985. The claim was based on the deduction of trade discounts given to distributors, which was a subject of ongoing dispute with the Revenue. The Hon'ble Supreme Court had previously ruled in favor of allowing such trade discounts as deductions, leading to the filing of the refund claim by the appellant.

The original adjudicating authority sanctioned the refund claims but directed them to be deposited in the consumer welfare fund due to the appellant's failure to prove that the duty had not been recovered from their customers. The central issue in the appeal was whether there was unjust enrichment. The appellant argued that the duty was paid under protest and the price lists were provisional due to litigation. However, the Commissioner (Appeals) noted that since the assessments were not provisional, the unjust enrichment aspect needed examination, leading to a factual dispute on this issue.

Furthermore, the appellant contended that the duty paid to the Revenue was not collected from customers, even though it was not separately reflected in the invoices. They provided a hypothetical example to support their claim, indicating that only a portion of the duty amount was recovered from customers. Citing relevant case law, the appellant argued that they were entitled to a refund as the duty element had not been passed on to customers due to quantity discounts.

Upon review, the Tribunal found that the lower authorities had not considered the issue from the appellant's perspective or reviewed the relevant case law presented. As a result, the Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority for a fresh decision, considering the appellant's contentions and the legal principles established in the judgments referenced. The appeal was allowed for further review and consideration.