2023 (9) TMI 1058 - AT - Central Excise

Refund claim - unjust enrichment - abatement percentage permitted on their product - they could not clear the goods from factory by claiming higher abatement due to oversight - goods were cleared by them to their depot and not to the ultimate consumer - Rate of rebate under Notification No. 26/2012 dated 10.05.2012 was varied from 25% to 35% - reliance placed upon the Chartered Accountant s Certificate - principles of unjust enrichment - HELD THAT - This Court finds that as pointed out by the Learned Commissioner (Appeals) the language of the CA certificate leaves much to be desired. And therefore for reasons stated he has correctly rejected the same. It is thus clear that variance in the rate of abatement just does not happen due to variance of Excise Duty only but also because of variance of other taxes that might have moved intandem with the rate of abatement. In fact percentage of abatement is likely to go up as per Section 4A(3) only when taxes have already been raised. It is thus clear that unless and until exact components of Excise duty varied as well as other taxes including state levies varied while computing abatement is known, it cannot be stated by a party categorically that it paid which tax in excess, specially when some state levies are meant for wholesalers and retailers. It is thus clear that in MRP based assessment, refund of non claim of abatement cannot be purely treated as a refund of excise duty paid in excess only as per Section 11B. Since the fixing of MRP has repercussions even under legislations like Legal Metrology Act and change of such MRP once goods are cleared from the end of manufacture, is not easy to change. Therefore, it cannot be agreed upon as mentioned by the appellant on the basis of the evidence made available that they having cleared the goods did not charge the price as per abatement claimed by them from ultimate consumer and also that excess abatement was only on account of excess excise duty, which they alone will have borne the brunt of in case of their above oversight. The onus which is upon the party as per presumption of Section 12B is therefore not discharged. However, it is desirable that department too while working out abatement as per Section 4A(3) should exhibit transparency in its working to indicate what all taxes and to what extent have been taken in to consideration or at least should liberally provide such information to concerned parties. Appeal dismissed.

Summary

Issues involved:
The case involves the issue of unjust enrichment in relation to the appellant's refund claim of Excise Duty during a specific period due to a change in abatement percentage. The main contention was the appellant's failure to provide sufficient evidence to prove that the duty burden was not passed on to the ultimate customers.

Details of the judgment:

1. Unjust Enrichment Issue:
The appellant claimed a refund of Excise Duty due to a change in abatement percentage but failed to prove that the duty burden was not passed on to customers. The Chartered Accountant's certificate provided by the appellant was found insufficient by the Commissioner (Appeals) as it merely relied on management representation without independent verification. Lack of evidence and various lacunae led to the rejection of the claim. The appellant argued that the goods for which the refund was claimed were not sold but transferred to depot/godown, and the duty was not recovered from any person. However, the lower authorities held that the duty element passed on as per the Maximum Retail Price (MRP) assessment basis. The court found that the appellant did not discharge the onus of proving no unjust enrichment, especially considering the implications of MRP under various legislations.

2. Valuation of Excisable Goods:
The court highlighted Section 4A(3) of the Central Excise Act, which allows for abatement consideration based on various taxes payable on goods. The variance in abatement percentage is not solely due to Excise Duty but also other taxes. Without clarity on the exact components of the varied taxes, it cannot be definitively stated that excess tax was paid. The lack of information on taxes included in abatement and the passing on of any benefits to consumers or retailers further weakened the appellant's case. The court emphasized the importance of transparency in working out abatement to avoid unjust enrichment claims.

In conclusion, the court found no merit in the appeal and rejected it based on the lack of evidence to prove non-passing of duty burden and the complexities involved in MRP-based assessments.