2019 (6) TMI 1139 - AT - Central Excise

Refund claim - finalization of provisional assessment - unjust enrichment - passing of incidence of duty to its customers - whether the refund claim is hit by unjust enrichment and as to whether the appellants have shown enough evidence so as to satisfy that the incidence of duty has been borne by them and has not been passed on to the customers? - HELD THAT - Various judgments of the Hon ble Supreme Court, High Courts and Tribunal have settled the issue of presumption under Section 12B of Central Excise Act, 1944. Such a presumption requires to be negated by sufficient evidence by the person who is claiming refund. IN the instant case, except for putting forth arguments theoretically, the appellants have not put forth any incontrovertible evidence to prove that the burden of duty has not been passed on to their customers. Neither from the sample invoices nor from certificate by cost accountant, it cannot be inferred that the incidence of duty has not been passed on. We find that the lower authorities have shown due diligence in adhering to the orders of the Hon ble High Court of Bombay in this regard, have verified the evidence made available to them by appellants and have come to the conclusion rightly that the appellants could not prove that the incidence of duty has not been passed on to the buyers and was borne by them. Appeal dismissed - decided against appellant.

Issues Involved:

1. Refund claim of ?63,90,541 on finalization of provisional assessment.
2. Transfer of refund amount to the Consumer Welfare Fund.
3. Rebuttal of presumption that the incidence of duty has been passed on to customers.
4. Examination of evidence provided by the appellant, including Cost Accountant’s certificates.
5. Application of the doctrine of unjust enrichment.

Issue-wise Detailed Analysis:

1. Refund Claim of ?63,90,541 on Finalization of Provisional Assessment:
The Appellants, M/s. Kores India Ltd, claimed a refund of ?63,90,541 for the period 1992-1997 after the finalization of provisional assessment, involving deductions of various post-manufacturing expenses from the wholesale sale price. The Assistant Commissioner initially allowed the refund but transferred the amount to the Consumer Welfare Fund, asserting that the appellant had passed on the duty incidence to its customers.

2. Transfer of Refund Amount to the Consumer Welfare Fund:
The Commissioner (Appeals) modified the Assistant Commissioner’s order, stating that the refund related to depot sales should be granted to the appellant and not credited to the Consumer Welfare Fund. However, upon further appeal by the Revenue, the Tribunal upheld the Assistant Commissioner’s decision. The High Court of Bombay later remanded the matter back to the Assistant Commissioner to ascertain whether the refunds had already been recovered by the appellant from the customers.

3. Rebuttal of Presumption that the Incidence of Duty has been Passed on to Customers:
The appellant argued that the presumption of passing on the duty incidence is rebuttable. They presented Cost Accountant’s certificates to support their claim that the duty element had not been passed on to the customers. However, the lower authorities did not consider these certificates adequately. The Assistant Commissioner found that the appellant recovered central excise duty from their customers based on sample invoices. The Commissioner (Appeals) noted that the invoices did not separately indicate the amount of duty paid, as required under Section 12A of the Act, and concluded that the sale price should be deemed to include the duty by virtue of the presumption in Section 12B.

4. Examination of Evidence Provided by the Appellant:
The appellant contended that the selling price was market-driven and not dependent on the cost of production, as evidenced by the Cost Accountant’s certificates. They argued that the lower authorities failed to consider these certificates, which demonstrated that no part of the duty paid formed part of the price at which the goods were ultimately sold to the customer. The appellant maintained that the requirement of Section 12A was satisfied, and the presumption under Section 12B was rebutted by the Cost Accountant’s certificates.

5. Application of the Doctrine of Unjust Enrichment:
The appellant argued that the doctrine of unjust enrichment did not apply in their case because the duty paid in excess was on their own account and not passed on to the customers. They asserted that the selling price was market-driven, as established by the Cost Accountant’s certificates. The lower authorities, however, concluded that the incidence of duty had been passed on to the customers, as evidenced by the sample invoices and the Cost Accountant’s certificates, which showed varying profit margins.

Conclusion:
The Tribunal upheld the lower authorities' decision, concluding that the appellant failed to provide incontrovertible evidence to prove that the incidence of duty had not been passed on to the customers. The Tribunal found no reason to interfere with the impugned order, thereby dismissing the appeal.

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