2016 (4) TMI 727 - HC - Central Excise

Refund claim denied - doctrine of unjust enrichment - Held that - In the instant case, the plastic pipes/tubes were cleared on payment of duty for captive consumption in the manufacture of Drip Irrigation System and the petitioner was not able to produce any documentary proof to establish that the duty has not been passed on to the buyer. In the judgment reported in Mafatlal Industries Vs. Union of India 1996 (12) TMI 50 - SUPREME COURT OF INDIA held that it is the responsibility of the assessee to establish that the duty incidence has not been passed on to any other customer. The order of the 3rd respondent is absolutely correct, since it is settled law that refund should not lead to unjust enrichment. That apart, the petitioner was not able to show any evidence that there was no change in the price of their final product with reference to the date of commencement of the period of refund of claim. Moreover, none of the invoices for the period prior to the period of dispute was made available to show that the price charged has been uniform throughout notwithstanding the payment of duty on the plastic tubes captively consumed. Merely because duty has been paid under protest does not give credence to the claim of the petitioner that they had not passed on the incidence of duty to their customer. In these circumstances, the ratio laid down in Union of India Vs. Solar Pesticide Pvt. Ltd. 2000 (2) TMI 237 - SUPREME COURT OF INDIA and Mafatlal Industries Vs. Union of India 1996 (12) TMI 50 - SUPREME COURT OF INDIA squarely applies to the facts and circumstances of the present case.

Issues:
1. Refund of excise duty paid under protest.
2. Application for rectification of the order.
3. Applicability of the principle of unjust enrichment.
4. Interpretation of judgments related to unjust enrichment.
5. Appeal against the orders passed by the Appellate Tribunal.
6. Compliance with statutory provisions in passing orders.

Issue 1: Refund of excise duty paid under protest:
The petitioner, engaged in the manufacture of Drip Irrigation System, sought a refund of Rs. 41,58,566 paid under protest between October 1995 and August 1999. The petitioner argued that the duty on plastic pipes/tubes cleared as part of the system was not passed on to the customers. The 2nd respondent allowed the refund, but the Revenue appealed, leading to the 3rd respondent's order restoring the initial decision. The petitioner's claim for refund was rejected by the 1st respondent, leading to a series of appeals and counter-appeals.

Issue 2: Application for rectification of the order:
The petitioner filed an application for rectification against the orders dated 12.07.2002 and 21.01.2003, which was dismissed by the 3rd respondent. The petitioner challenged these orders through the Writ Petitions.

Issue 3: Applicability of the principle of unjust enrichment:
The respondents argued that the duty incidence had been passed on to the buyer, citing the principle of unjust enrichment. They contended that the petitioner failed to provide evidence that the duty was not passed on to the customer. The respondents relied on the judgments emphasizing the responsibility of the assessee to prove non-passing of duty incidence to any other customer.

Issue 4: Interpretation of judgments related to unjust enrichment:
Both parties relied on various judgments related to unjust enrichment, including cases where the duty was absorbed by the assessee and passed on to the customer. The respondents argued that the judgments cited by the petitioner were not applicable to the present case due to differing facts and circumstances.

Issue 5: Appeal against the orders passed by the Appellate Tribunal:
The standing counsel for the respondents contended that the orders dated 21.01.2003 and 12.07.2002 were passed correctly and did not warrant interference through the Writ Petitions. They cited statutory provisions allowing appeals to the High Court from orders passed by the Appellate Tribunal.

Issue 6: Compliance with statutory provisions in passing orders:
The respondents argued that the orders passed by the 3rd respondent were in line with settled law regarding unjust enrichment and refund claims. They maintained that the petitioner failed to demonstrate that the price of the final product remained unchanged despite the duty payment on plastic tubes, thus justifying the denial of the refund claim.

In conclusion, the High Court dismissed the Writ Petitions, emphasizing the application of the principle of unjust enrichment and the lack of evidence supporting the petitioner's claim that the duty incidence was not passed on to the customers. The Court upheld the orders passed by the respondents, citing statutory provisions and settled legal principles.

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