2019 (11) TMI 173 - AT - Central Excise

Refund of Excise duty - refund claims have been rejected on the ground of unjust enrichment - HELD THAT - Clause 7 gives the right to the buyer that the buyer with a notice to the supplier can make a reasonable adjustment in price or other terms as a result of any such change. The said clause does not talk about any composition/design etc. It says only that if they want to reduce the price, they will give notice to the supplier and price can be reduced. As per the decision of the Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE, MADRAS VERSUS M/S ADDISON CO. LTD. 2016 (8) TMI 1071 - SUPREME COURT , wherein it has been held that if the assessee is able to prove that the ultimate buyer of the goods have not borne the duty components, refund can be claimed - Admittedly in the case, in hand the buyer M/s Ashok Leyland Ltd. was the ultimate consumer of the parts which have been used by them to manufacture the vehicles. Therefore, the appellant is able to prove that duty component has not been passed on the buyer, as the buyer has issued debit note to them for duty component. In that circumstances, the appellant is entitled to claim refund of excess duty paid at the time of clearance of the goods. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection on grounds of unjust enrichment.

Analysis:
The appellant, a manufacturer of motor vehicle parts, appealed against the rejection of refund claims due to unjust enrichment. The buyer reduced prices, leading to the appellant filing a refund claim for excess duty paid between December 2015 and March 2016. Initially rejected due to availing prior exemptions, the claim was later denied by the Commissioner (Appeals) citing unjust enrichment. The appellant argued that the buyer, Ashok Leyland Ltd., did not bear the duty component as the ultimate consumer, referencing the case of CCE Vs. Addison & Co. Ltd. The Tribunal examined the agreement, noting that the buyer could adjust prices with notice, and found the buyer did not bear the duty component, as evidenced by debit notes issued. Relying on the Addison & Co. Ltd. case, the Tribunal allowed the appeal, granting the refund claim.

In conclusion, the Tribunal overturned the rejection of the refund claim based on unjust enrichment. The appellant successfully demonstrated that the ultimate buyer did not bear the duty component, as supported by the buyer's issuance of debit notes. Citing relevant legal precedents, the Tribunal allowed the appeal and granted the refund claim.