2018 (5) TMI 9 - AT - Central Excise

Refund of excess duty paid - rejection on the ground of unjust enrichment - Held that - affidavit issued by the buyer of the goods indicates that they have not paid the excess duty claimed by the appellant in its invoice - the Chartered Accountant has also issued the certificate, certifying that the incidence of duty has not been passed on by the appellant to any other person and the incidence of such amount has been borne by it - the doctrine of unjust enrichment is not applicable - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Rejection of refund claim on the ground of unjust enrichment.

Analysis:
The case involved a dispute regarding the rejection of a refund claim based on the doctrine of unjust enrichment. The appellant, a process house engaged in processing man-made fabrics, had paid duty on the value of galleries included in the length of chambers of a stenter machine during a specific period. A previous tribunal order had held that galleries were not to be included in the computation of chamber length, resulting in a lower duty liability. The appellant sought a refund of the excess duty paid. The jurisdictional Central Excise Authorities initially rejected the refund claim as time-barred, but the Commissioner (Appeals) later allowed the appeal with consequential benefits. The appellant then requested a refund, which was met with a show cause notice on the grounds of unjust enrichment. The matter was adjudicated, partially allowing the refund claim, but rejecting part of it based on unjust enrichment. The appellant appealed to the Tribunal challenging the rejection.

The appellant argued that the excess duty paid was not passed on to any other party, thus unjust enrichment did not apply. Supporting documents included a balance sheet, a certificate from a Chartered Accountant, and an affidavit from buyers confirming they had not paid the excess duty claimed by the appellant. The respondent, represented by the DR, reiterated the findings of the impugned order. After hearing both sides and examining the case records, the Tribunal found that the refund claimed amount was reflected as an "advance excise duty deposit" in the balance sheet. The Chartered Accountant's certificate and the buyer's affidavit confirmed that the duty incidence was not passed on and was borne by the appellant. Consequently, the doctrine of unjust enrichment was deemed inapplicable, and the appellant was entitled to the refund amount, which would be credited to the Consumer Welfare Fund. The Tribunal set aside the impugned order and allowed the appeal in favor of the appellant, granting the consequential benefit of refund.