2019 (11) TMI 487 - AT - Central Excise

Refund of excess duty paid - Unjust enrichment - finalization of provisional assessment - instead of paying the refund amount to the appellant, the same was credited to the Consumer Welfare Fund, in terms of Section 11B(2) of the Central Excise Act, 1944 - HELD THAT - The incidence of excess paid duty, in this case, had not been passed on by the appellant to any other person and same has been borne by it all along, till the date of filing of the refund application. Further, the learned Commissioner (Appeals) by placing reliance on the profit and loss account has held that excess duty has been shown as an element of expenditure and thus, the doctrine of unjust enrichment is attracted for crediting the refund amount to the Consumer Welfare Fund. However, on perusal of the profit and loss account for the relevant period, I find that the excess duty reflected therein was deducted from the gross sales value of the goods. The excess duty amount indicated in the profit and loss account was towards normal sales transaction value, at which the goods were sold by the appellant. Since, the refund in question was not a part of excess duty indicated in the profit and loss account and separate accounting treatment was provided in the Balance Sheet, the interpretation placed by the learned Commissioner (Appeals) regarding transfer of refund amount to the Consumer Welfare Fund cannot be sustained. There are no merits in the impugned order passed by the learned commissioner (Appeals) - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Claim for refund of excess excise duty.
2. Applicability of the doctrine of unjust enrichment.
3. Interpretation of accounting records to determine passing on of duty incidence.
4. Decision on crediting refund amount to Consumer Welfare Fund.

Analysis:
1. The appellant, engaged in the manufacture of lubricating oil, sought a refund of excess excise duty paid during the disputed period. The appellant had initially resorted to provisional assessment, which was later finalized by the central excise authorities, resulting in the identification of excess duty paid. Subsequently, refund applications were filed by the appellant, which were adjudicated favorably by the original authority. However, the refund amount was credited to the Consumer Welfare Fund instead of being paid to the appellant, leading to the filing of appeals before the Tribunal.

2. The appellant contended that the incidence of excess duty had not been passed on to any other person, thus invoking the doctrine of unjust enrichment to claim the refund. The appellant supported this claim by submitting relevant financial records, including the Balance Sheet, to demonstrate that the duty incidence had been borne solely by the appellant without being transferred to buyers or any other entity.

3. The Revenue argued that the duty incidence had been passed on by the appellant to its buyers, as reflected in the profit and loss account where the central excise duty had been deducted from gross sales, impacting the company's profitability. However, upon examination of the Balance Sheet and other financial records, the Tribunal found conclusive evidence that the excess duty amount had not been passed on and had been borne by the appellant throughout.

4. The Tribunal emphasized that the onus is on the claimant to prove that the duty incidence has not been passed on to any other party. By analyzing the accounting entries and financial statements, the Tribunal determined that the excess duty amount had not been integrated into the normal sales transaction value, as indicated in the profit and loss account. Therefore, the Tribunal concluded that the refund amount should not have been credited to the Consumer Welfare Fund based on the doctrine of unjust enrichment.

In conclusion, the Tribunal set aside the impugned order, allowing the appeals in favor of the appellant and granting the consequential benefit of refund, based on the established facts regarding the passing on of the excess duty incidence and the inapplicability of the doctrine of unjust enrichment in this case.