2016 (12) TMI 1222 - AT - Central Excise

Refund claim - unjust enrichment - excise duty was paid on the price without deduction of discount - Held that - in case of duty shown to have been collected from particular person then it cannot be presumed the same could have been collected from any other person unless positive evidence is brought on record - The appellant have substantially established that the incidence of excess paid duty has not been passed on to any other person and department could not bring any material contrary to the evidence produced by the appellant - appeal allowed - decided in favor of appellant-assessee.

Issues Involved:
1. Unjust Enrichment
2. Refund Claim under Section 11B of the Central Excise Act, 1944

Issue-wise Detailed Analysis:

1. Unjust Enrichment:

The core issue in this case is whether the appellant has passed on the incidence of the excess excise duty paid to their customers, which would invoke the principle of unjust enrichment. The appellant contends that the excess duty paid was not passed on to the customers, as evidenced by their balance sheet for the year 2008-09, which shows the refund amount as 'receivable'. The appellant argues that the amount could only be shown as receivable once it was ascertained to be refundable, which was only after the finalization of the assessment. The appellant also produced a Chartered Accountant's certificate supporting their claim.

On the contrary, the Revenue argues that since the appellant did not book the amount as receivable in the year 2007-08, the incidence of duty was already passed on in that year, making unjust enrichment applicable. The Revenue's contention is based on the principle that if an amount is not shown as receivable in the balance sheet of the relevant year, it implies that the incidence has been passed on to another person.

Upon careful consideration, it was found that the refund arose from the finalization of the provisional assessment, where the appellant had paid duty on the basic sale price but charged excise duty on the discounted price to their customers. This indicates that the excess duty paid was not collected from the customers. The adjudicating authority's presumption that the incidence of duty was passed on to another person was not supported by any contrary evidence. The accounting treatment of showing the amount as receivable in the subsequent year is acceptable under Income Tax norms and does not imply that the incidence was passed on. The burden of proving that the incidence of duty was passed on lies with the department, which failed to bring any evidence to support their claim.

2. Refund Claim under Section 11B of the Central Excise Act, 1944:

The appellant filed a refund claim for the excess duty paid amounting to ?39,57,598/-. The adjudicating authority sanctioned the refund but credited it to the Consumer Welfare Fund under Section 11B, citing unjust enrichment. The appellant argued that the excess duty was not passed on to the customers and was shown as receivable in the balance sheet for the year 2008-09. The appellant relied on several judicial precedents to support their claim that the burden of proof lies with the department to show that the incidence of duty has been passed on.

The Tribunal found that the evidence produced by the appellant, including the Chartered Accountant's certificate and the balance sheet, sufficiently established that the incidence of duty was not passed on to any other person. The Tribunal also referred to various judgments which held that the presumption of passing on the burden of duty cannot be made without positive evidence. The Tribunal concluded that the lower authority's decision was based on an incorrect presumption and lacked supporting evidence.

Conclusion:

The Tribunal set aside the impugned order, allowing the appeal of the appellant with consequential relief in accordance with the law. The Tribunal emphasized that the appellant had substantially established that the incidence of excess paid duty had not been passed on to any other person, and the department failed to provide any contrary evidence.

(Order pronounced in court on 01/06/2016)

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