2002 (8) TMI 148 - AT - Central Excise

Summary

Issues:
1. Demand of differential duty based on classification list and benefit of notifications.
2. Refund claim of Rs. 10 lakhs deposited pending appeal.
3. Rejection of refunds on the grounds of burden passed on and unjust enrichment.

Analysis:

Issue 1:
The original adjudicating order demanded a differential duty based on the classification list and the benefit of specific notifications. The appellant filed an appeal seeking waiver of pre-deposit. The Assistant Commissioner directed deposit of the demanded amount during the appeal, leading to a settlement where the appellant paid Rs. 10 lakhs under protest. The appellant sought a refund following a favorable decision by the Commissioner (Appeals) based on the Trade Notice No. 86/01.

Issue 2:
The rejection of the refunds was primarily based on the argument of whether the duty incidence was passed on to customers by the appellants. The order-in-original did not clarify this aspect, necessitating a review of the show cause notice and the invoices raised by the appellants. The Assistant Collector found that the appellants had indeed collected the duty element from customers, as evidenced by the invoices, and therefore, were not entitled to the refund. The Assistant Collector credited the amount to the Consumer Welfare Fund.

Issue 3:
Upon hearing both sides and reviewing the submissions, it was noted that the Rs. 10 lakhs deposit was made after the clearance of goods, indicating that the burden was not passed on to customers. The Commissioner (Appeals) failed to consider this crucial point, leading to an unjust rejection of the refund claim based on the unjust enrichment clause. Consequently, the orders were set aside, and the appeal was allowed based on the findings that the deposit was made post-clearance, and no collection from customers occurred.

In conclusion, the appellate tribunal overturned the rejection of the refund claim, emphasizing that the deposit made by the appellant was not associated with passing on the duty burden to customers. The judgment highlighted the importance of considering the timing of deposits concerning customer collections and upheld the appellant's entitlement to the refund amount of Rs. 10 lakhs.