2003 (7) TMI 96 - HC - Central Excise

Refund - Unjust enrichment - Whether or not the bar of unjust enrichment will be attracted in a case where duty has been passed on to the buyer of goods not separately as duty but by inclusion in the price as one component of the same? - HELD THAT - Having regard to the definite view expressed by the learned Tribunal that the bar of unjust enrichment was not attracted in the instant case the questions as framed in our view do not require any answer since we agree that having paid the excise duty under protest and there being a subsequent finding that no excise duty was payable in respect of the goods, the respondent Company was entitled to refund and there was no question of unjust enrichment in the instant case. The reference is disposed of accordingly. There will be no order as to costs.

Summary

Issues Involved:
The issues involved in this case are:
1. Whether the bar of unjust enrichment applies when duty is passed on to the buyer as part of the price?
2. Justification of the Tribunal's decision on unjust enrichment in a case where price is inclusive of duties and taxes.
3. Compliance with legal principles in passing orders related to unjust enrichment.

Issue 1: Unjust Enrichment and Duty Passing to Buyer
The respondent submitted refund applications under Section 11B of the Central Excise Act, 1944, for excise duty paid on "Hose Pipe" sold to Indian Railways. The Assistant Commissioner disallowed the refunds, finding that duty had been passed on to the consumer in the price charged. The Commissioner (Appeals) upheld this decision.

Issue 2: Tribunal's Decision and Unjust Enrichment
The respondent appealed to CEGAT, which allowed the appeal based on a previous case. The Department challenged this decision, arguing that the price included excise duty, leading to unjust enrichment. The Department contended that the Tribunal erred in relying on a previous case and that the duty passed on to the buyer was evident in the pricing breakdown.

Issue 3: Compliance with Legal Principles
The respondent argued that the price agreed upon with the Railways was consolidated and inclusive of duty. The Tribunal considered the Railways' letter stating no excise duty was paid for the goods supplied. The respondent contended that paying duty under protest did not lead to unjust enrichment, as the duty was not actually payable.

The Court agreed with the Tribunal's finding that the pricing method used by the respondent did not trigger unjust enrichment. However, it noted a flaw in the way the questions were framed, assuming duty was passed on to the buyer, contrary to the Tribunal's findings. Referring to a Supreme Court judgment, the Court clarified that it was not bound by the framed questions. Ultimately, the Court held that since no excise duty was payable for the goods supplied, the respondent was entitled to a refund without unjust enrichment. The reference was disposed of with no costs awarded.