1985 (4) TMI 78 - HC - Central Excise

Summary

Issues Involved:
1. Deduction for "Surprise Incentive".
2. Refund claim for excise duty paid for specified periods.

Detailed Analysis:

1. Deduction for "Surprise Incentive":
The Petitioners sought a deduction for the "Surprise Incentive" offered to their customers in 1983. The scheme was detailed in circulars dated 23rd May 1983 and 1st November 1983, which outlined various incentives based on purchase targets. The Assistant Collector disallowed this deduction, arguing that the incentive was not known at the time of clearance. The Respondents contended that the incentive's quantum was unknown at the time of clearance and that the Petitioners failed to provide documentary evidence substantiating their claim.

The Court found merit in the Respondents' arguments, emphasizing that under Section 4(d)(ii) of the Central Excises and Salt Act, 1944, trade discounts must be known at or prior to the removal of goods to be deductible. The Supreme Court's clarification in 1984 (17) E.L.T. 329 reinforced this requirement. The Court concluded that the "Surprise Incentive" did not qualify as a trade discount because its quantum was not known in advance, and it was contingent upon fulfilling certain purchase targets. Therefore, the Petitioners were not entitled to claim this deduction.

2. Refund Claim for Excise Duty:
The Petitioners also sought a refund of excise duty for the periods from 1st July 1977 to 27th September 1979 and 1st January 1980 to 29th January 1980, amounting to Rs. 4,07,639/-. The Assistant Collector rejected this claim on the ground that it was filed beyond the six-month limitation period stipulated under Section 11B of the Central Excise Act.

The Court acknowledged that while the Assistant Collector was correct in rejecting the time-barred claim, it considered whether the claim could be allowed under its writ jurisdiction since the petition was filed within three years of the accrual of the claim. However, the Court decided against granting the refund, citing that the Petitioners had already recovered the excise duty from their customers. Allowing the refund would lead to unjust enrichment and misappropriation of funds that rightfully belonged to the customers and ultimate consumers. The Court referenced several Supreme Court decisions and judgments from other High Courts supporting this view.

Conclusion:
The petition was dismissed, and the Rule was discharged with costs. The Court held that the Petitioners were not entitled to the deduction for the "Surprise Incentive" and were also not entitled to the refund claim due to the time-bar and the principle against unjust enrichment.