2018 (1) TMI 104 - AT - Central Excise

Refund claim - unjust enrichment - abatement under N/N. 2/2007-CE (NT) dated 01.02.2007 - as the amount of abatement has been increased, therefore, the appellant has paid excess duty - Held that - As the price of the said goods has been fixed by the drugs authority, therefore, whatever duty is payable on the said goods is to be borne by the appellant and the appellant has charged only the MRP print price on their final goods and no evidence has been produced by the Revenue that the appellant has charged any amount over and above MRP price - whatever duty has been paid by the appellant and the same has been borne by the appellant only, therefore, question of bar of unjust enrichment does not arise - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection on grounds of unjust enrichment.

Analysis:
The appellant, a manufacturer of bulk drugs, appealed against the rejection of a refund claim due to unjust enrichment. The appellant paid duty under Section 4(A) of the Central Excise Act, 1944, availing abatement prescribed by a notification. Despite an increase in payment from 40% to 42.5%, the appellant continued paying at the lower rate. The Revenue contended that the excess duty was passed on to customers, leading to unjust enrichment. The appellant argued that as prices were fixed by the drugs authority and goods sold at MRP, the duty burden was solely on them, citing precedents like M/s Gobind Sugar Mills Ltd. and M/s Dupen Laboratories Pvt. Ltd.

The Tribunal noted the undisputed practice of the appellant clearing goods at MRP and paying duty post-abatement. The Revenue's claim of unjust enrichment was dismissed based on the Dupen Laboratories Pvt. Ltd. case, which emphasized that unjust enrichment doesn't apply when products are sold at MRP unless there's evidence of overcharging. Since the drugs' prices were fixed, and the appellant only charged MRP, the duty burden fell on them alone. The Revenue failed to prove any excess charges beyond the MRP. Consequently, the Tribunal allowed the refund claim, setting aside the impugned order.

In conclusion, the appeal was allowed, granting consequential relief. The judgment highlighted the importance of fixed prices in determining unjust enrichment, emphasizing that in the absence of evidence of overcharging, the duty burden borne by the appellant alone negates the unjust enrichment argument.