2005 (11) TMI 11 - AT - Central Excise

Central Excise Respondent paid duty under protest and filed for refund claim Additional duties and levies not taken up by the buyers No bar of unjust enrichment

Summary

Issues:
1. Whether the respondents are entitled to a refund of duty paid under protest.
2. Whether the doctrine of unjust enrichment applies in this case.

Issue 1: The respondents manufactured packaged drinking water and availed SSI exemption. Proceedings were initiated against them for denying exemption for a specific period. The Additional Commissioner dropped the proceedings, and the respondents filed refund claims. The adjudicating authority rejected the claims, but the Commissioner (Appeals) ruled in favor of the respondents. The Revenue appealed this decision, arguing that the duty incidents were passed on to buyers, making the respondents ineligible for a refund. The advocates for the respondents countered this by presenting evidence that the duty burden was not transferred to the buyers. The Tribunal examined the records and the buyer's letter, which explicitly stated that they would not absorb any additional duties and levies on the agreed prices. The Tribunal concluded that the respondents were entitled to the refund as there was no evidence of passing on the duty to the buyer. The appeal by the Revenue was dismissed.

Issue 2: The Revenue contended that the doctrine of unjust enrichment applied, citing discrepancies in pricing patterns before and after the duty payment. They argued that the duty burden was passed on to the buyers. The advocates for the respondents presented arguments and case laws to support their stance that the duty burden was not transferred. The Tribunal analyzed the buyer's letter, which confirmed that no additional duties would be absorbed. The Commissioner (Appeals) had also reasoned that unjust enrichment did not apply in this case. The Tribunal concurred, stating that the buyer's refusal to absorb additional duties negated any unjust enrichment claim. The Tribunal found no legal infirmity in the impugned order and rejected the Revenue's appeal.

In conclusion, the Tribunal upheld the Commissioner (Appeals) decision, ruling in favor of the respondents and dismissing the Revenue's appeal. The Tribunal found that the duty burden was not passed on to the buyers, making the respondents eligible for the refund claimed. The doctrine of unjust enrichment was deemed inapplicable due to the buyer's explicit refusal to absorb additional duties and levies.