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Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2005 (4) TMI AT This

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2005 (4) TMI 225 - AT - Central Excise

Issues:
- Whether the bar of Unjust Enrichment applies to the refund of duty sought by M/s. A.K. Spintex Ltd.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved the question of whether the bar of Unjust Enrichment applies to the refund of duty sought by M/s. A.K. Spintex Ltd. The Appellants, engaged in processing man-made fabrics, received grey unprocessed fabric from suppliers and claimed deemed Cenvat Credit under Notification No. 7/2001-C.E. (N.T.). Prior to 11-6-2001, the rate of deemed credit was 45%, which was later increased to 50% through an amendment. The Appellants, unaware of the amendment until 13-6-2001, continued to clear processed fabric at a duty rate of 55%. Their customers protested against this overcharge and issued debit notes to rectify the discrepancy. Subsequently, the Appellants filed a refund claim for the excess duty paid, which was rejected on the grounds of unjust enrichment.

The learned Advocate for the Appellants argued that the duty incidence was not passed on to the customers, as evidenced by the customers' objection to the higher duty rate and the issuance of debit notes to recover the excess amount charged. Referring to a decision by the Larger Bench of the Tribunal in a similar case, the Advocate contended that since the duty amount was not collected from the customers, the principle of unjust enrichment should not apply in this scenario.

In response, the learned D.R. reiterated the findings of the impugned Order and emphasized the lack of proof provided by the Appellants to demonstrate that the duty incidence was not passed on to their customers.

After considering both sides' submissions, the Member (T) found merit in the Appellants' argument that the duty incidence had not been transferred to their customers, who promptly objected to the excess duty charge and issued debit notes. Since the customers did not pay the excess duty amount, it was held that the bar of unjust enrichment does not apply. Therefore, the appeal was allowed, and the Appellants were granted the refund of duty sought.

This judgment highlights the importance of demonstrating that the duty incidence was not passed on to customers to avoid the application of the principle of unjust enrichment in refund cases.

 

 

 

 

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