2015 (12) TMI 1346 - AT - Central Excise

Denial of refund claim - Excess tax paid - duty was paid on higher price - unjust enrichment -Held that - Agreement entered by the appellant with Karnataka Antibiotics & Pharmaceuticals Ltd. indicates that the appellant is required to discharge duty liability on the products on the agreed rates including all taxes and duties would mean that the assessable value needs to be worked back by the appellant for discharging the duty liability. Appellant has discharged the duty liability on the rates which are indicated on agreement. The adjudicating authority has relied upon clause no. 3.17 and clause no. 4.3 of the said agreement the appellant has correctly discharged the Central Excise duty; I find that the reasoning adopted by the both the lower authorities is incorrect as clause no. 4.3 requires the appellant herein to discharge the Central Excise duty correctly and clear the goods after payment of duty while clause no. 3.17 is very particular as to the rates which are to be considered for discharge of duty liability by the appellant. - appellant has been showing the amount for which refund is claimed, in the balance sheet under head loan and in advances. This also indicates that appellant has not expensed out the amounts which have been paid by them as excess Central Excise duty in this appeal. - impugned order are held as unsustainable and liable to be set aside - Decided in favour of assessee.

Summary

Issues:
1. Refund claim of excess Excise duty paid by the appellant.
2. Burden of unjust enrichment.
3. Interpretation of agreement terms with Karnataka Antibiotics & Pharmaceuticals Ltd.
4. Discharge of duty liability by the appellant.
5. Rejection of refund claim by lower authorities.

Analysis:
The appeal in this case pertains to a refund claim filed by the appellant for excess Excise duty paid during the period of April 2007 to December 2007. The appellant, a manufacturer of pharmaceutical goods under a loan license for Karnataka Antibiotics & Pharmaceuticals Ltd., discharged duty liability initially. However, it was later discovered that they had paid excess duty not in accordance with the contract. A show cause notice was issued to the appellant regarding unjust enrichment. The adjudicating authority and the first appellate authority rejected the refund claim, prompting the appeal.

The appellant argued that they had submitted relevant documents such as the agreement copy, Chartered Accountant's certificate, and a letter from Karnataka Antibiotics & Pharmaceuticals Ltd. supporting their eligibility for a refund. They contended that the lower authorities erred in rejecting the claim based on an interpretation of the agreement terms. The appellant also highlighted that they had not recovered the excess amount from Karnataka Antibiotics & Pharmaceuticals Ltd., as evidenced by the Chartered Accountant's certificate and the letter from the company.

The departmental representative countered by stating that the appellant should have raised these points earlier and suggested that the appellant should have pursued recovery from Karnataka Antibiotics & Pharmaceuticals Ltd. for the excess duty paid. After considering both sides' arguments and examining the records, the tribunal identified the main issue as the excess Excise duty paid by the appellant and whether a refund was warranted.

The tribunal found that the appellant had correctly discharged the duty liability as per the agreement terms. The Chartered Accountant's certificate and the communication from Karnataka Antibiotics & Pharmaceuticals Ltd. supported the appellant's claim that they had not recovered the excess duty amount. The tribunal concluded that the lower authorities had erred in rejecting the refund claim and held that the appellant was entitled to the refund based on the specific agreement terms and factual evidence presented.

In light of the factual findings and precedents cited, the tribunal set aside the impugned orders, allowing the appeal and granting consequential relief to the appellant. The judgment underscores the importance of interpreting contractual obligations accurately and considering factual evidence in refund claims related to duty liabilities.