2016 (8) TMI 34 - AT - Central Excise

Refund - unjust enrichment - valuation dispute was decided in favor of assessee - Pan Masala not containing tobacco and beetle nut not more than 10% - Held that - In as much as various invoices clearly indicate the quantum of duty charged and passed on to the customers, it is to be inferred that the excess amount of duty now arrived at as refundable has been passed on to the ultimate customers. The various case laws relied upon by the appellant deal with various cases in which the MRPs have remained constant even though there have been variation in the duty rates. In the cited decisions, under different circumstances it has been held that the duty element has not been passed on. But on careful consideration of these case laws we find that the facts of the present case are totally on a different footing from those. Therefore, these case laws are of no help to the appellant. Appellant failed to passed the test of unjust enrichment - Decided against the assessee.

Summary

Issues:
1. Interpretation of notification no. 13/2002-CE(NT) dated 13.02 regarding excise duty on Sada Pan Masala.
2. Application of section 4 of the Central Excise Act 1944 for valuation.
3. Principle of unjust enrichment under section 11B of the Central Excise Act.
4. Claim for refund and credit to the Consumer Welfare Fund.
5. Dispute over passing on the duty incidence to customers.

Analysis:
1. The appeal contested the order of the Commissioner (A) Jaipur regarding the excise duty on Sada Pan Masala under notification no. 13/2002-CE(NT) dated 13.02. The Tribunal referred to the case of Kothari Products Ltd. Vs. CCE Shillong, indicating that Pan Masala not containing tobacco and beetle nut not more than 10% falls outside the purview of a specific notification. Consequently, valuation was to be done under section 4 of the Central Excise Act 1944. The appellants filed refund claims, which were deemed admissible by the Assistant Commissioner but were credited to the Consumer Welfare Fund due to unjust enrichment principles.

2. The appellant argued for cash refund instead of crediting the Consumer Welfare Fund, contending that they maintained uniform wholesale prices regardless of duty changes, implying they bore the duty incidence. The Tribunal considered the appellant's submission and the calculation of duty payable under section 4, determining that the duty was charged and shown separately in invoices. Despite constant MRP and wholesale prices, the invoices revealed the duty amount, indicating it was passed on to customers.

3. The Tribunal analyzed various case laws cited by both parties, emphasizing the need to demonstrate that no duty portion was reimbursed to customers. Despite the constant MRP, the Tribunal found that the duty element was passed on to customers based on invoice details. The Tribunal distinguished the present case from cited decisions, concluding that the duty incidence was indeed transferred to customers, justifying the credit to the Consumer Welfare Fund.

4. In light of the above considerations, the Tribunal rejected the appeal, affirming that the duty incidence had been passed on to customers, and the lower authorities correctly credited the refund amount to the Consumer Welfare Fund. The decision highlighted the importance of invoice transparency and the absence of evidence showing the duty amount was not reimbursed to customers, leading to the dismissal of the appeal.