2014 (7) TMI 614 - AT - Central Excise

Denial of refund claim - Unjust enrichment - Issue of credit notes - readymade garments - element of duty in the purchase order - Held that - Certificate has been filed by the customer of the appellant stating that they have not borne the liability which have been originally passed on to them and that they have not passed on the liability to their customers. - in this case the goods being exempt, the question of the 3rd party claiming refund just does not arise. In this case, a third party or the ultimate customer could not have filed refund claim at all with the Department since the invoices would not show excise duty element at all. The ultimate customer In this case would not know what is the amount of refund to be claimed by him and whether there was any excise duty paid by his supplier at all. The assessee in this case after analyzing there was excess charge made by them indicated in their mail the price at which purchase order was issued actually related to the bigger boxes and there was a mistake on the part of the customer and the actual prices was only ₹ 5.20 per box taxes and other levies. Apparently, both the sides agreed that there was a mistake in the purchase order and both sides had understood the cost of ₹ 5.20/- as the transaction value and there was mistake in the documentation. Therefore, the Commissioner s observation that the appellant has to show that in the costing of the product element of excise duty has not been taken into account also is not relevant in this case if both the parties had clearly understood that the value of the box would be only ₹ 5.20 and there was a mistake in the purchase order and raising of invoices. In such a case, naturally the costing would not have proceeded on the basis that the cost of the box was higher. - Decided in favour of assessee.

Summary

Issues:
1. Refund claim filed due to higher price quoted by customer.
2. Unjust enrichment in the case.
3. Entitlement for refund after issuing credit note.
4. Passing on of duty liability to ultimate customers.
5. Exemption of readymade garments from Central Excise duty.

Analysis:
1. The appellant filed a refund claim due to clearing paper boxes at a higher price based on a mistake in the purchase order. The customer revised the order, and the excess amount was adjusted in the running account. The refund claim was rejected on the grounds of unjust enrichment.

2. The main issue was whether unjust enrichment applied in this case. The Revenue argued that issuing a credit note did not entitle the assessee to a refund. However, the facts of a previous case were found not comparable. The settlement of amounts did not show any delay, contrary to the Revenue's claim.

3. The Revenue also contended that the duty liability was passed on to ultimate customers. The Chartered Accountant cited a case where it was held that the Revenue cannot go beyond the first customer to determine unjust enrichment. The appellant provided a certificate stating the customer did not bear the liability and did not pass it on to their customers.

4. The exemption of readymade garments from Central Excise duty was a crucial aspect. The invoices did not show any excise duty element due to the goods being exempt. The ultimate consumer would not be able to claim a refund as they wouldn't know the excise duty paid by the supplier. Both parties acknowledged a mistake in the purchase order, indicating the actual cost was lower, which negated the need to consider excise duty in the costing.

5. The judgment found no merit in the Revenue's arguments and set aside the impugned order, allowing the appeal filed by the assessee with any consequential relief. The decision was made after thorough analysis of the issues raised and the relevant legal precedents cited.