2009 (4) TMI 147 - AT - Central Excise

Refund bar of unjust enrichment - The claim was accompanied by a few documents including a copy of credit note dated 29-8-2006 held that - On 30-7-2006 the buyer sent a letter to the assessee declining to accept the burden of duty on the above goods. This was done well within the period of credit covered by the purchase order and invoices. On 29-8-2006 the assessee issued a credit note to the buyer crediting the aforesaid amount of duty to the latter s account. In terms of the Hon ble High Court s ruling on these facts the burden shifted to the Revenue but the same was not even attempted to be discharged. The assessee succeeded in rebuffing the burden of proof cast on them under Section 12B of the Central Excise Act and consequently the bar of unjust enrichment was obviated refund allowed

Summary

Issues:
Refund claim rejection based on unjust enrichment.

Analysis:
The appeal was filed against the rejection of a refund claim due to unjust enrichment. The assessee sold excisable products to a buyer under four invoices totaling duty of excise Rs. 77,444. The refund claim was accompanied by a credit note dated 29-8-2006. The department proposed to deny the refund on the grounds of unjust enrichment, alleging the duty incidence was passed on to the buyer. The original authority rejected the claim based on a Tribunal decision. The appeal was filed against this decision.

The High Court's ruling in UOI v. A.K. Spintex Ltd. was cited, stating that the burden of proof against unjust enrichment could be discharged by issuing a credit note to the buyer post-clearance of goods. The burden on the seller under Section 12B of the Central Excise Act is rebuttable, and evidence like debit and credit notes can be used. If the price of goods is reduced post-credit note issuance, duty incidence is not passed on. The burden shifts to the Revenue to disprove the claim. The Tribunal's Larger Bench also held that if duty was not collected, the refund claim is not hit by unjust enrichment.

In this case, the buyer declined to accept the duty burden within the credit period, and the assessee issued a credit note crediting the duty amount to the buyer. The burden of proof was successfully rebutted by the assessee under Section 12B, and unjust enrichment was avoided. The refund claim should be allowed without unjust enrichment. The impugned order was set aside, and the appeal was allowed.