2004 (9) TMI 219 - AT - Central Excise

Summary

Issues involved:
Whether the bar of unjust enrichment is applicable to the refund of Central Excise duty sought by M/s. Jalan Steel Works (P) Limited.

Comprehensive Analysis:

Issue 1: Unjust Enrichment
The appellant, M/s. Jalan Steel Works, sought a refund of Central Excise duty, questioning the applicability of the bar of unjust enrichment. The appellant manufactured re-rolled products of non-alloy steel and had initially discharged duty under Section 3A of the Central Excise Act. They requested a re-determination of their annual production capacity due to a change in a parameter, "d," which was denied by the Commissioner. The Tribunal allowed their appeal, leading to a refund claim of Rs. 10,29,694. However, the refund was ordered to be deposited in the Consumer Welfare Fund as the duty incidence was believed to have been passed on to customers. The appellant argued that they had absorbed the duty burden and did not pass it on, especially under the compounded levy scheme. They contended that the duty liability was unconnected to the quantity of goods cleared. The appellant relied on a Tribunal decision supporting their stance.

Issue 2: Legal Provisions
The respondent, represented by Shri S.C. Pushkarna, argued that as per Section 11B of the Central Excise Act, the claimant of a duty refund must prove that the duty was paid by them and not passed on to others. They cited a Supreme Court ruling stating that the presumption is that duty incidence is passed on to buyers. The respondent emphasized that the indirect nature of excise duty implies it is typically passed on to customers.

Judgment
The Tribunal analyzed both parties' submissions and highlighted that under Section 11B, the burden lies on the claimant to prove that the duty incidence was not passed on. In this case, the appellant paid duty based on the annual capacity determined by the Commissioner, which was known to them during the relevant period. The Tribunal noted that the duty burden would naturally affect contract prices, and the appellant failed to prove they did not consider this burden while setting prices. The Tribunal distinguished previous cases cited by the appellant, stating they were not directly relevant to the current situation. Ultimately, the Tribunal found no merit in the appeal and rejected it, upholding the decision that the duty incidence had been passed on, thus applying the bar of unjust enrichment to the refund claim.

This detailed analysis outlines the key arguments, legal provisions, and the Tribunal's reasoning leading to the rejection of the appeal regarding the application of the bar of unjust enrichment to the Central Excise duty refund claimed by M/s. Jalan Steel Works (P) Limited.