2016 (3) TMI 396 - AT - Central Excise

Duty on the cut flowers grown and sold in DTA - as the respondent already paid duty on the cut flowers i.e. non excisable goods, whether they are entitle for the refund claim and whether refund claim hit by unjust enrichment - Held that - We find that the cut flowers produced by the respondent is not excisable goods at the relevant time, they were working under Notification No. 126/94-Cus dated 3/6/1994 as amended by Notification No. 56/2001 dated 18/5/2001. In the present case the cut flowers is non excisable goods, by application of above notification the duty require to be paid is equal amount of duty leviable on the input used in the production of cut flowers. In the impugned order, Ld Commissioner has upheld the duty of input like fertilizer, chemical therefore duty over and above this amount is not payable on the cut flowers. The judgment cited by the A.R. are on the issue that what duty is to be paid on the non excisable goods and it was held that duty is required to be paid as per notification no. 126/94-Cus i.e. equal amount of custom duty leviable on input used in the excisable goods therefore we find that Ld. Commissioner(Appeals) has correctly held that the duty of the total duty paid by the respondent of amount of ₹ 18,91,609/- is not payable. This tribunal in another case of Commissioner of Central Excise, Pune-I Vs. Vikram Greentech(I) Ltd 2016 (3) TMI 380 - CESTAT MUMBAI held that no duty can be demanded on cut flowers being non excisable goods. As per above legal position, we are of the view that the duty is not chargeable on the cut flowers produced by the respondent. As regard unjust enrichment, we find that the respondent has taken a stand that since duty was not payable, the payment made by them is without authority of law, in such case unjust enrichment is not applicable. The Ld. Commissioner (Appeals) also held that payment made is without authority of law, unjust enrichment is not applicable. We disagree with these submissions as well as findings of the Ld. Commissioner(Appeals) at the time of payment of duty it was paid as excise duty only and refund of the said duty was sought for therefore it cannot be said that duty was paid without authority of law. If the contention of the Ld. Commissioner (Appeals) is accepted then in all the cases where amount paid by the assesee which was not laible to be paid and refund is sought for, the payment will be treated as without authority of law and in such cases the law of unjust enrichment will become redundant. We find that neither the Adjudicating authority nor Ld. Commissioner(Appeals) has verified the documentary evidence produced before us claiming that incidence of duty so paid was not passed on to any other person, we therefore remand the matter to Adjudicating authority to consider all the documents produced/to be produced by the respondent and pass a fresh order only on the aspect of unjust enrichment.

Summary

Issues Involved:
1. Duty payment by 100% EOU on cut flowers sold in DTA
2. Entitlement for refund claim on non-excisable goods
3. Application of unjust enrichment principle

Analysis:

Issue 1: Duty Payment by 100% EOU on Cut Flowers Sold in DTA
The appellant, a 100% EOU, contested the duty payment on cut flowers grown and sold in DTA. The Revenue sought duty on imported input consumables used in production, citing various judgments. However, the respondent argued that duty was only payable on the imported inputs as per Notification No. 126/94-Cus. The Tribunal agreed, emphasizing that duty was only required on the inputs used in producing non-excisable goods, not on the final product. The duty paid by the respondent was deemed not payable, aligning with legal precedents and the notification's provisions.

Issue 2: Entitlement for Refund Claim on Non-Excisable Goods
The question of refund entitlement arose concerning the duty paid on non-excisable cut flowers. The appellant contended that unjust enrichment did not apply as the duty was paid without legal authority. The Tribunal disagreed with this assertion, stating that the duty was initially paid as excise duty, justifying the refund claim. However, the matter was remanded to the Adjudicating authority for further verification of evidence regarding the passing on of duty incidence to others. The Tribunal directed a fresh order on the unjust enrichment aspect within two months.

Conclusion
The Tribunal ruled in favor of the respondent, holding that duty payment on cut flowers was not required beyond the duty on imported inputs. The refund claim was justified, subject to verification of unjust enrichment. The judgment highlighted the importance of adhering to legal provisions and proper verification of duty payment incidents. The case was disposed of by remand for a detailed assessment of unjust enrichment, ensuring adherence to legal principles and procedural fairness.