2016 (4) TMI 145 - AT - Central Excise

Refund claim - applicability of doctrine of unjust enrichment - whether duty on MS & HSD was required to be paid at transaction price recovered from the dealers or the same should be based on prices prevailing at Partapur depot during the relevant period - Held that - Appellant paid excess duty on an amount which was charged from the dealers in Partapur area. However, for the supplies made to Noida & Bulandsahar area, where lower transaction price was agreed upon as compared to Partapur, duty was paid at higher value but duty at lower value was recovered from the dealers of Noida & Bulandsahar at the agreed upon price. The duty for such clearances was thus required to be paid at the agreed upon price (Transaction value) and not the value at which duty was paid. Transaction value under the existing Section 4 cannot be fixed based on the place of clearance alone but has to be seen alongwith the fact as to what is the agreed upon price for the purpose of determining transaction value. It is also observed that CBEC Circular dated 30/6/2000 (Para-5) also conveys the same interpretation regarding new Section 4 of the Central Excise Act, 1944. Therefore, appellant on merits has correctly filed the refund claims alongwith requisite documents and calculations. So far as applicability of unjust enrichment once documentary evidences/certificates have been produced by the appellant to the effect that excess duty paid has not been recovered from the dealers then it has to be held that appellant has discharged its onus of non-recovery from the customers/dealers as per Section 11B of the Central Excise Act, 1944. Even the invoices issued to the dealers also do not suggest that excess duty paid by the appellant has been recovered from the dealers. Once appellant has discharged the initial burden of non recovery of the duty refund sought for, then burden shifts to the Revenue to substantiate with documentary evidence that appellant has recovered the excess duty from the customers. It is not the case of the Revenue that excess duty paid by the appellant has been included in the manufacturing expenditure and not reflected as an amount receivable in their books of accounts. In the absence of any such counter, it is held that unjust enrichment is not applicable to the existing facts on records.

Summary

Issues:
(i) Whether duty on MS & HSD was required to be paid at transaction price recovered from the dealers or the same should be based on prices prevailing at Partapur depot during the relevant period.
(ii) Whether doctrine of unjust enrichment is applicable to the present refund claims.

Analysis:

Issue (i):
The first appellate authority held that duty should be paid based on the transaction value prevailing at Partapur depot. However, the Tribunal disagreed, stating that the concept of 'transaction value' under the Central Excise Act, 1944, requires a more nuanced approach. The duty should be paid based on the agreed-upon price for the specific transactions, not a uniform value based on the depot location. The Tribunal referenced case law and CBEC Circular to support this interpretation. Therefore, the appellant's refund claims were valid as they paid duty at a higher value but recovered at a lower value from dealers in different areas.

Issue (ii):
Regarding unjust enrichment, the appellant provided certificates, ledgers, and invoices to prove that the excess duty paid was not recovered from the dealers. As per Section 11B of the Central Excise Act, once the appellant shows non-recovery, the burden shifts to the Revenue to prove otherwise. Since there was no evidence that the excess duty was included in manufacturing expenditure or reflected in the books, unjust enrichment was deemed inapplicable. Consequently, the appeals were allowed, providing relief to the appellant.

In conclusion, the Tribunal ruled in favor of the appellant on both issues, emphasizing the correct application of transaction value and the absence of unjust enrichment in the case.