2014 (6) TMI 448 - AT - Central Excise

Denial of refund claim - unjust enrichment - Central Excise duty on Biris - excess payment of duty despite the fact that duty was reduced - price inclusive of duty - uniform price - stability in price - sale and purcase between primary societies and central society - Held that - appellants were not showing the duty separately in their invoices and it is their claim that prior to 1-3-2007 and after 31-7-2007 and also in between the price of biris remained same irrespective of the amount of duty paid mainly whether it is Rs. 8/- or Rs. 10/-. - Following decision of Union of India v. Mulder India (P) Ltd. 2006 (8) TMI 210 - HIGH COURT OF KARNATAKA AT BANGALORE - Decided in favour of assessee.

Summary

Issues:
1. Whether the primary society is entitled to a refund of excess duty paid.
2. Whether the Central Society is entitled to a refund of the duty borne by them.
3. Application of the doctrine of unjust enrichment in the present case.

Analysis:

Issue 1:
The primary society had paid excess duty from 3-5-2007 to 31-7-2007 due to a change in duty rates. The duty amount was recovered by the primary society from the Central Society. The primary society's refund claim was rejected on the grounds of unjust enrichment, stating that the excess duty had been collected from the Central Society. The rejection was based on the belief that the duty incidence had been passed on to the Central Society. However, the Central Society argued that they had borne the duty incidence. The lower authorities rejected the Central Society's refund claim for failing to demonstrate that the duty incidence had not been passed on to their customers.

Issue 2:
The Central Society relied on a decision of the Hon'ble High Court of Karnataka in a similar case, where it was observed that the price structure of the product remained unchanged despite an increase in duty, indicating that the higher duty had not been passed on to customers. The Central Society contended that the price of biris remained the same regardless of the duty amount paid. The issue was found to be covered by the decision of the Hon'ble High Court of Karnataka, supporting the Central Society's argument.

Issue 3:
The doctrine of unjust enrichment was a crucial aspect of the case. The learned AR cited a decision by the Hon'ble Supreme Court emphasizing the necessity for a claimant to prove no unjust enrichment and that the burden had not been passed on to customers. However, the Tribunal differentiated the present case from the cited cases, highlighting that the duty element was not separately shown in the invoices, unlike the cases cited by the AR. The Tribunal also noted that the decisions cited by the AR were by the Tribunal itself, whereas the Central Society relied on judgments from the jurisdictional High Court. The Tribunal concluded that the Central Society had successfully demonstrated that unjust enrichment did not apply in their case, allowing their appeal with consequential relief.

In conclusion, the judgment favored the Central Society, recognizing their entitlement to a refund of the duty borne by them, as they successfully argued that the duty incidence had not been passed on to their customers. The Tribunal's decision highlighted the importance of specific facts and legal precedents in determining the application of the doctrine of unjust enrichment in refund claims.