2018 (2) TMI 1670 - AT - Central Excise

Refund claim - price variation clause - unjust enrichment - verification of report from Railways is required on the credit notes submitted by the appellant - Held that - this exercise is to be carried out by the adjudicating authority for sanction of refund after ascertaining the fact whether the incidence of duty has been passed on or otherwise. Therefore, no purpose will be served to keep the matter pending with this Tribunal - matter remanded to the adjudicating authority with a direction that the adjudicating authority shall ascertain the fact - appeal allowed by way of remand.

Summary

Issues Involved:
1. Whether the refund claim is affected by unjust enrichment.

Analysis:
The judgment revolves around the issue of unjust enrichment concerning a refund claim filed by the respondent. The case involves the supply of manufactured goods to the Railways with a price variation clause in the contract. The appellants paid differential duty based on price fluctuations, leading to refund claims in some instances. The adjudicating authority initially approved the refunds, but the Revenue challenged this decision on grounds of unjust enrichment. Subsequently, the Commissioner (Appeals) sided with the Revenue, prompting the appellant to file appeals. The appellate tribunal directed the adjudicating authority to verify whether the excess amount charged was not passed on to the Railways. The appellant provided a Chartered Accountant certificate supporting their claim. The tribunal emphasized the need for verification from the Railways regarding credit notes to determine if duty incidence was passed on. The matter was remanded to the adjudicating authority for further examination.

The appellant argued that the refund disallowance by the Commissioner (Appeals) was unjust, as the excess amount was not transferred to the Railways due to revised prices. The appellant's submission, along with the Chartered Accountant certificate, aimed to prove that the duty incidence was not passed on. On the other hand, the Revenue reiterated the findings of the impugned order and highlighted the tribunal's previous directive to provide credit note details for verification. The appellant complied by submitting the required information to the adjudicating authority, who sought additional time for a report.

Upon careful consideration, the tribunal concluded that the crucial issue was verifying the credit notes with the Railways to determine if the duty incidence was passed on. The adjudicating authority was tasked with ascertaining whether the credit note amount was recovered from the Railways. If the amount was not recovered, the refund could be sanctioned. In cases where obtaining a report from the Railways was not feasible, the adjudicating authority could rely on the appellant's Books of Account for verification. Consequently, the tribunal allowed the appeals by remanding the matter to the adjudicating authority for further examination and decision.

In conclusion, both appeals were allowed by way of remand to the adjudicating authority for a detailed review of the refund claims in light of unjust enrichment concerns. The judgment underscores the importance of verifying whether the duty incidence was passed on to determine the eligibility for refunds in such cases.