2018 (7) TMI 771 - AT - Central Excise

Refund of excess duty paid - unjust enrichment - it was alleged that the appellant could not produce sufficient evidence to establish that the burden of excise duty claimed as refund has not been passed on to others - Whether the appellant had passed on the burden to the customers of the amount claimed by them as refund? Held that - From the labels/laminates produced by the appellant it indicates that the MRP is inclusive taxes. Even if the MRP remained same before and after the clearances of the excess duty paid it is not clear whether the burden of duty is not included in the MRP or other wise - This issue has been considered by Division of this Tribunal involving similar circumstances in Sh. Baidyanath Ayurved Bhavan case 2008 (8) TMI 324 - CESTAT MUMBAI where the Tribunal has considered the fact that even though on the labels it was clearly mentioned that the price does not include Central Excise duty but observed that the appellant could not establish that the burden of duty had not been passed on to others. In the present case on the contrary the label/laminate produced by the appellant shows that the MRP is inclusive of all taxes. Thus the appellant could not establish that the excess duty paid by them during the relevant period has not been recovered from the customers by not including the same in the MRP of the goods. The copies of balance sheet produced also do not show that the amount was considered as receiveables from the department - refund rightly rejected. Appeal dismissed - decided against appellant.

Summary

Issues:
Determining whether the burden of duty claimed as a refund has been passed on to customers.

Analysis:
The appeal was filed against an order passed by the Commissioner (Appeal) Central Excise- Rajkot. The appellant, engaged in candy manufacturing, had cleared goods to depots at a higher duty rate, resulting in an excess payment. The appellant filed a refund claim, which was initially rejected but later sanctioned by the adjudicating authority. The Revenue appealed, leading to the current appeal.

The appellant argued that the burden of duty had not been passed on to customers, supporting their claim with evidence such as product descriptions, a Chartered Accountant's certificate, and balance sheet entries. They referenced relevant case law to strengthen their position.

On the other hand, the Revenue contended that the appellant had passed on the duty burden to customers based on the Maximum Retail Price (MRP) indicated on product labels. They cited a Tribunal judgment to support their stance.

After hearing both sides, the tribunal determined the key issue to be whether the burden of duty had been passed on to customers. While discrepancies existed in product descriptions, the tribunal found that the goods were the same. However, the crucial factor was whether the duty burden was included in the MRP. The tribunal referenced a previous case involving similar circumstances to highlight the importance of proving that duty incidence was not included in the MRP.

The tribunal emphasized the doctrine of unjust enrichment, stating that relief could only be granted if it was proven that the burden was not passed on to consumers. The burden of proof lay with the appellant to rebut this presumption, which they failed to do. The tribunal upheld the impugned order, rejecting the appeal based on the appellant's inability to demonstrate that the excess duty paid had not been recovered from customers.

In conclusion, the tribunal's decision was based on the failure of the appellant to prove that the duty burden had not been passed on to customers, as indicated by the inclusive MRP on product labels. The judgment highlighted the importance of establishing the non-inclusion of duty in the MRP to claim a refund successfully.