2008 (4) TMI 179 - AT - Central Excise

Refund - Assessee plea is that initially the goods were provisionally assessed and it is consequent upon final assessment that duty became payable and was paid by them, so principle of unjust enrichment will not be applicable assessee s plea is not acceptable - since assessee had accepted both in written submission as well as during the personal hearing that they had passed burden of duty to the buyers, refund was rightly rejected on ground of unjust enrichment

Summary

Issues:
- Rejection of refund claims on the ground of unjust enrichment.
- Applicability of unjust enrichment doctrine in the case.
- Interpretation of Section 11B of the Act.
- Requirement to show non-passing of duty burden to consumers for refund claims.
- Effect of passing on duty burden to customers on refund claims.

Analysis:
The judgment by the Appellate Tribunal CESTAT MUMBAI involved the rejection of refund claims by the authorities based on the principle of unjust enrichment. The appellants argued that unjust enrichment did not apply as the duty became payable only after final assessment, and they sought a refund. However, referencing the Apex Court's decision in Sahakari Khand Udyog Mandal Ltd. v. Commissioner of Central Excise & Customs, the Tribunal emphasized the doctrine of unjust enrichment as a basis for denying benefits not otherwise entitled. The Tribunal highlighted the necessity for the appellant to demonstrate payment without passing on the burden to consumers to qualify for a refund, irrespective of statutory provisions like Section 11B of the Act.

Regarding the applicability of Section 11A and Section 11E to refund claims for duty paid after provisional assessment finalization, the Tribunal referred to the Apex Court's decision in Commissioner of Central Excise, Chennai v. T.V.S. Suzuki. However, the Tribunal relied on a subsequent Apex Court decision, emphasizing that claimants must prove non-passing of duty burden to consumers for refund eligibility. In the specific case, the adjudicating authority found that the appellants had indeed passed on the duty burden to M/s. Britannia Industries Ltd., as acknowledged by the appellants themselves during submissions and personal hearings. Consequently, the Tribunal upheld the impugned order, rejecting the appeal due to the duty burden being passed on to customers, in line with the Apex Court's decision and the findings of the adjudicating authority.

The judgment underscores the significance of the doctrine of unjust enrichment in refund cases, requiring claimants to establish non-passing of the duty burden to consumers to qualify for a refund. The Tribunal's decision aligns with the Apex Court's rulings, emphasizing the need for claimants to prove that they have not transferred the duty burden to customers to be eligible for a refund, even in cases of duty paid following provisional assessment finalization.