1990 (6) TMI 81 - HC - Central Excise

Summary

Issues:
1. Refund of excess excise duty collected by the respondents.
2. Question of unjust enrichment.
3. Burden of excess excise duty passed on to consumers by the distributors.

Analysis:

Issue 1: Refund of excess excise duty
The court issued a notice to determine if the respondents had passed on the burden of excess excise duty collected to their dealers. The respondents argued against refund, claiming it would result in unjust enrichment as the petitioners had already collected it from customers. However, the petitioners cited Central Government instructions prohibiting denial of refund on the grounds of unjust enrichment under Section 11B of the Central Excises and Salt Act, 1944. The court found in favor of the petitioners, stating that the respondents failed to establish passing on the burden to consumers, entitling the petitioners to the refund.

Issue 2: Question of unjust enrichment
The respondents initially contended that refunding the excess excise duty would lead to unjust enrichment as the petitioners had already collected it from customers. However, the court considered the Central Government instructions directing the sanctioning of refund claims in accordance with the law and Section 11B of the Act. The court held that the respondents could not raise the question of unjust enrichment based on these instructions.

Issue 3: Burden of excess excise duty passed on to consumers
The distributors, AGIL, argued that the burden of excess excise duty was not passed on to consumers. They explained that the excise duty charged was only 1.62% of the total price, not the excess duty collected. AGIL's pricing strategy was based on market competition, offering trade discounts to dealers to stay competitive. The court accepted AGIL's arguments, noting that the respondents failed to prove that the burden was transferred to consumers. AGIL did not claim a refund in the petition but reserved the right to do so against the petitioners.

The court ordered the respondents to refund the excess excise duty collected, which had been deposited in court, along with accrued interest. The ruling was made without costs to either party, and the Prothonotary was directed to act upon the order.