2008 (10) TMI 196 - AT - Central Excise

Refund - Excise duty paid despite exemption notification unjust enrichment - There is no dispute that the appellants had not received the amount of duty charged by it in the relevant invoices from its buyer, M/s. BEML. - They did not issue any credit note to M/s. BEML to balance their accounts. Revenue has no case that the appellants had collected duty amount initially at the time of clearance of the goods. Held that refund of the impugned amount will not involve unjust enrichment and that the appellants are entitled to cash refund of the same. The appeal is allowed.

Summary

Issues:
Claim for refund of exemption under Notification No. 63/95-C.E.; Application of principle of unjust enrichment in duty refund cases.

Analysis:
The case involved M/s. Sandfits Foundries (P) Ltd., engaged in manufacturing brake drums, who cleared consignments to M/s. Bharath Earth Movers Ltd. claiming exemption under Notification No. 63/95-C.E. The Commissioner (Appeals) upheld the original authority's decision to credit the refund in the Consumer Welfare Fund. The appellants argued that their case was covered by the Tribunal's decision in S. Kumar's Ltd. v. CCE, where non-collection of duty amount from the buyer did not lead to unjust enrichment. Similarly, decisions in Alstom Ltd. and Varinder Agro Chemicals Ltd. supported their claim. The Tribunal found that the appellants did not receive the duty amount from the buyer and did not pass on the incidence of duty. Therefore, the appellants were entitled to a cash refund as per the principle laid down in various judgments, including those of the Apex Court.

The learned JDR contended that the facts of the case differed from previous decisions relied upon by the appellants. However, the Tribunal held that the appellants not receiving the duty amount from the buyer and not issuing credit notes to balance accounts distinguished their case from the principles of unjust enrichment. The Tribunal emphasized that the appellants did not collect duty initially at the time of clearance, aligning with the decisions in S. Kumar's Ltd., Alstom Ltd., and Varinder Agro Chemicals Ltd. The Tribunal rejected the reliance on the Ballarpur Industries Ltd. case, which held that the manufacturer cannot claim a refund if the duty incidence was not passed on to the buyer, as subsequent credit notes were deemed insignificant.

In conclusion, the Tribunal ruled in favor of the appellants, allowing the appeal and granting them a cash refund of the duty amount. The decision was based on the application of the principle of unjust enrichment and the appellants' non-collection of duty from the buyer, as established by various legal precedents, including judgments of the Apex Court.