2014 (1) TMI 419 - AT - Central Excise

Refund of duty rejected Doctrine of unjust enrichment Held that - The merits of the case stand held in favour of the assessee, the issue of unjust enrichment is required to be examined - the appellant bifurcated the total consideration received from their customers into the value of the goods as also excise duty shown separately on the invoices - The total of the cost plus excise duty was being recovered from their customers - examination of invoices clearly show that the excise duty paid by the appellant was being recovered from their customers - the appellant has not been able to discharge the onus placed upon it for proving that excise duty has not been recovered from their customers - total consideration received by them from their customers prior to disputed period stand bifurcated into the cost and excise duty (though the total remained the same) makes it very clear that it was the cost of the product which was reduced by the appellant during the relevant period and the that the refund claim is not admissible on the basis of unjust enrichment where reduced cost along with leviable excise duty was being recovered by them Decided against Assessee.

Summary

Issues:
1. Rejection of refund of duty paid during a specific period.
2. Dispute over exemption of duty for reeling process.
3. Decision on merits by the Rajasthan High Court.
4. Examination of unjust enrichment in the refund claim.

Analysis:
1. The appellant filed a refund claim for duty paid from 30.11.95 to 31.03.2002, amounting to Rs. 68,16,546, which was rejected on both merit and unjust enrichment grounds. The appellant, engaged in the reeling process, initially claimed exemption from duty but later registered and paid duty under protest. The Commissioner dropped a demand for unpaid duty from 01.03.94 to 07.11.95, which was upheld by the Tribunal and the Rajasthan High Court.

2. The issue was found in favor of the appellant based on the Rajasthan High Court's decision in a similar case involving the same appellant. Consequently, the Revenue's appeal challenging the matter on merit was dismissed. However, for the appellant's appeal, although the merit was in their favor, the aspect of unjust enrichment needed examination. The appellant had shown excise duty separately on invoices but failed to prove that the duty was not recovered from customers. Despite a letter to the Central Excise authorities stating they would not collect the amount, the appellant's practice of reducing the cost of the product along with the leviable excise duty indicated unjust enrichment, leading to the rejection of the appeal.

3. The judgment emphasized that the appellant's practice of recovering the excise duty from customers through reduced product costs did not discharge the burden of proving non-recovery. Despite the appellant's communication to authorities, the bifurcation of total consideration into cost and excise duty, while maintaining the same total, illustrated unjust enrichment. Consequently, the appellant's appeal was rejected, and both appeals were disposed of accordingly, including the cross objection filed by the appellant against the Revenue's appeal, which was in the form of written submissions.