2004 (2) TMI 239 - AT - Central Excise

Summary

Issues:
1. Refund of excise duty paid on parts of pressure cookers.
2. Applicability of doctrine of unjust enrichment in case of captive consumption.
3. Interpretation of Section 11B regarding excise duty on captively consumed parts.
4. Claim for refund without invoking doctrine of unjust enrichment.
5. Burden of proof on passing on the incidence of duty.
6. Impact of constant product prices on the presumption of passing on duty.
7. Rejection of refund claim based on Madras High Court decision.

Analysis:
1. The case involved appeals by both the Revenue and the assessee regarding the refund of excise duty paid on parts of pressure cookers. The appellants claimed refund as they argued that the duty paid on parts was not passed on to buyers as there was no increase in the price of pressure cookers.

2. The appellants contended that the doctrine of unjust enrichment should not apply in the case of captive consumption, citing the Solar Pesticides case of the Bombay High Court. They argued that since the parts were captively consumed and not sold, Section 11B regarding excise duty should not apply.

3. The interpretation of Section 11B was crucial in determining the applicability of excise duty on captively consumed parts. The Commissioner (A) directed the original authority to consider the evidence regarding the price structure and to ensure that the refund pertained only to parts used in the manufacture of pressure cookers sold by the appellants.

4. The appellants urged for a refund without invoking the doctrine of unjust enrichment and sought interest on the refunded amount. They relied on various tribunal decisions to support their claim for a direct refund without considering unjust enrichment.

5. The burden of proof on passing on the incidence of duty was a key issue. The Tribunal observed that each case must be examined individually to determine if the duty incidence was passed on. The burden of proving non-passing of duty was considered significant and challenging.

6. The constant prices of pressure cookers, despite duty payments on parts, were highlighted by the appellants as evidence that the duty incidence was not passed on. However, the Tribunal emphasized that the fact that prices remained constant did not conclusively prove non-passing of duty incidence.

7. The rejection of the refund claim was based on the Madras High Court decision, which held that if final product prices remained constant despite incurring duty on inputs, the duty incidence was likely passed on to buyers. Following this precedent, the appeal for refund was rejected, and the Revenue's appeal was allowed based on the constant prices indicating passing on of duty incidence.