2017 (4) TMI 1123 - AT - Central Excise

Refund claim - duty paid by the ONGC (by whom appellants bought scrap) by encashing the bank guarantee of appellants - denial on the ground of unjust enrichment that the appellants have not produced any original duty paying document to evidence the appellant s payment of duty and to further evidence that the incidence of duty was borne by them - Held that - The appellants as a buyer is entitled for refund of duty on the goods purchased by them, therefore, appellants are legally entitled for claiming the refund. In such case, the appellants cannot be insisted to provide the original duty paying document in their name as the proof of payment of duty. As regards unjust enrichment, we find force in the argument of the ld. counsel that the goods were produced and sold without payment of duty in the year 1999 whereas the excise duty was paid in 2002 due to the demand proceedings was initiated by the department. There is no question of passing of the said duty by the appellants to the buyer of such goods. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Locus standi to file an appeal before the appellate authority.
2. Refund claim rejection based on unjust enrichment and lack of evidence of duty payment.

Analysis:
1. Locus Standi Issue:
The case involved ONGC selling scrap to the appellants without duty payment, leading to a demand for excise duty from ONGC. The Tribunal initially held that the appellants lacked locus standi to appeal, as the order was against ONGC. However, the High Court ruled in favor of the appellants, allowing them to pursue the case before the appellate authority. The Tribunal eventually dropped the demand, resulting in a refund claim by the appellants. The Dy. Commissioner rejected the refund claim, citing the lack of original duty-paying documents and evidence of duty incidence not being passed on. The Commissioner (Appeals) upheld this decision, emphasizing the need for evidence that the duty was borne by the appellants and not passed on.

2. Refund Claim Rejection Issue:
The appellants argued that they had given a bank guarantee to ONGC, which was encashed to pay the duty. They contended that the duty payment by ONGC, borne by them, was not passed on during the goods' sale. They presented evidence, including a certificate from ONGC and relevant circulars and judgments, to support their claim. The revenue representative countered, stating that duty paying particulars were related to ONGC, not the appellants, and questioned the lack of evidence on unjust enrichment. The Tribunal analyzed the evidence and found that the duty was paid by ONGC through the bank guarantee encashment, establishing the duty payment. The appellants' entitlement to a refund was affirmed, as they were the buyers of the goods and legally eligible for the claim. The Tribunal emphasized that the duty was not passed on, as evidenced by the accounting treatment and affidavit provided by the appellants, ultimately allowing the appeal and setting aside the impugned order.

In conclusion, the Tribunal allowed the appeal, ruling in favor of the appellants based on the evidence presented, establishing their entitlement to the refund claim and refuting the unjust enrichment argument.