2009 (5) TMI 87 - AT - Central Excise

Excess payment This appeal filed by the department is against grant of refund - The invoice is primary evidence of amount having been recovered by the respondent from the buyer. The burden was high on them to prove to the contra, i.e., to show that the burden of duty was not passed on to the buyer - claim of the respondent that they retained the above amount with them without passing on the burden to the buyer, by making adjustments in their General Ledger Account, which adjustment is referred to as rectification , is not acceptable - the respondent was not entitled to get cash refund of the amount on account of the bar of unjust enrichment - It is settled law that the bar of unjust enrichment cannot be got over on the sole ground of the price of the goods remaining constant during the period around the date of sale of the goods

Summary

Issues:
Grant of refund of Central Excise duty and Education Cess, unjust enrichment, burden of duty passed on to the buyer, application for stay of operation, interpretation of relevant case laws.

Analysis:
The appeal before the Appellate Tribunal concerned the grant of a refund of Rs. 2,16,698/- for Central Excise duty and Education Cess. The original authority had initially held the amount to be refundable but credited it to the Consumer Welfare Fund due to the bar of unjust enrichment under Section 11B(2) of the Central Excise Act. The first appellate authority, however, found that the duty burden had not been passed on to the buyer and allowed the refund to the assessee. The department challenged this decision, arguing that the duty burden had indeed been passed on to the buyer as indicated in the invoice, and that the case law cited by the Commissioner (Appeals) was not applicable.

The appellant relied on judgments from the Supreme Court and the Punjab and Haryana High Court to support their appeal. The counsel for the respondent argued against the stay application, stating that the refund had already been realized. The respondent's counsel presented evidence, including a rectified General Ledger Account and a copy of the relevant invoice, to demonstrate that the duty burden had not been passed on to the buyer. The Tribunal found the stay application to be infructuous and proceeded to address the appeal.

The Tribunal analyzed the invoice and found that the duty amount had been recovered from the buyer by the respondent. The burden was on the respondent to prove that the duty burden was not passed on to the buyer, as per the relevant provisions of the Central Excise Act. However, the Tribunal concluded that the burden had not been discharged in this case. The respondent's claim that they retained the amount without passing on the burden was not substantiated, as no credit note or document was issued to the buyer for this purpose. The Tribunal emphasized that the bar of unjust enrichment cannot be overcome solely based on the price of goods remaining constant. Without independent and strong evidence against passing on the duty burden, a refund claim cannot be allowed. As such evidence was lacking in this case, the Tribunal set aside the impugned order and allowed the appeal in favor of the department.

In conclusion, the Tribunal ruled in favor of the department, holding that the refund claim was hit by the bar of unjust enrichment due to the failure to prove that the duty burden was not passed on to the buyer.