2005 (10) TMI 127 - AT - Central Excise

Validity Of order-in-original - Refund of establishment charges which is paid by them is not a duty - Unjust enrichment - HELD THAT - The appellants also did not produce any balance sheet for the relevant years to show that these amount claimed as refund were in dispute with the Government. Any amount paid by the appellants or any company is in the form of expenses and is generally accounted as an expense in their Profit Loss Account. Costing of the products of the company takes into consideration all the expenses charged to expense account in Profit Loss Account and are appropriated as overhead. The appellants are also unable to produce any Chartered Accountant s Certificate or a Cost Accountant s Certificate to the contrary. Though their products were chargeable to specific rate of duty that does not mean that the price of their product could not have included this amount. On the contrary the sale price could have been determined by them considering these expenses. In respect of the argument that these establishment charges were paid for the export of the goods hence cannot be charged from any customer to whom the goods have been exported I feel that it is a question of expenses which is debited to the Profit Loss Account and appropriated to the sales price of the product. They may not have collected this amount from the customers but definitely would have loaded on to the value of the goods without quoting specifically. Since the appellants were unable to produce any documentary evidence in any form that these expenses were not recovered from their customers I am unable to agree with the appellants. Hence the appeal is rejected and the adjudication order is upheld.

Summary

Issues:
Challenge to rejection of refund claim by Commissioner of Central Excise based on establishment charges paid by the appellants for overseeing export of goods.

Analysis:
1. Rejection of Refund Claim: The appellants challenged the order-in-original rejecting their refund claim for establishment charges paid to the Central Excise Department. The appellants argued that the amount paid was not a duty but an amount, citing the need to prove no unjust enrichment as per directions from the High Court. They contended that the charges were not collected from customers and were not related to duty payment as the goods were cleared for export during the relevant period. The appellants also emphasized that the charges were paid in a lump sum, not linked to specific consignments, and referred to various case laws to support their claim.

2. Contentions of the Parties: The learned counsel for the appellants highlighted the need to show no unjust enrichment and absence of passing on the duty incident to customers for refund eligibility. On the other hand, the SDR emphasized the requirement for documentary evidence proving that the refund amount was not passed on to customers. The SDR relied on the Supreme Court's decision in Solar Pesticides case to argue that indirect collection from customers could not be ruled out without evidence to the contrary.

3. Judicial Review: The Tribunal reviewed the case, noting that it was a second appeal before them. The Tribunal referenced a previous order dismissing the appeal and subsequent legal actions taken by the appellants, including a Writ Petition before the High Court of Rajasthan. The Tribunal highlighted the High Court's direction regarding unjust enrichment and the burden on the appellants to demonstrate non-inclusion of the charges in their Profit & Loss Account. The Tribunal found that the appellants failed to provide evidence regarding the accounting treatment of the charges and their impact on product pricing. Without documentary evidence to show non-recovery from customers, the Tribunal upheld the rejection of the refund claim, emphasizing the need for substantiation in such matters.

4. Conclusion: Ultimately, the Tribunal rejected the appeal and upheld the adjudication order, emphasizing the appellants' failure to prove non-recovery of establishment charges from customers. The Tribunal highlighted the importance of documentary evidence and accounting transparency in establishing refund eligibility, especially concerning unjust enrichment. The decision underscored the necessity for clear substantiation in demonstrating the non-inclusion of charges in product pricing and financial records to support refund claims related to such expenses.