2006 (9) TMI 1 - SC - Central Excise

Central Excise - Refund - Where the excise duty was specified as nil no unjust enrichment but where the price is inclusive of excise duty, the principal applies even if duty not shown separately

Summary

Issues Involved:
1. Classification of goods under excise duty sub-headings.
2. Determination of whether the price included excise duty.
3. Application of the principle of unjust enrichment.
4. Consideration of findings of fact by the Tribunal and the High Court.

Issue-wise Detailed Analysis:

1. Classification of Goods under Excise Duty Sub-headings:
The respondent, a company manufacturing 'Hose Pipe', supplied goods to the Indian Railways and paid excise duties under sub-heading 4009.92. The respondent contended that the goods should be classified under sub-heading 4009.99, which was eventually accepted. Despite this, the respondent paid duties under protest and sought a refund of Rs. 6.30 lakhs, which was rejected by the authorities on grounds of unjust enrichment.

2. Determination of Whether the Price Included Excise Duty:
The Tribunal examined the contracts and correspondence between the respondent and the railway administration. It found that the prices were inclusive of excise duty, but subsequent letters from the railways indicated no provision for excise duty in the pricing. The Tribunal concluded that the price did not include an element towards Central Excise duty, relying on its judgment in Cimmco Ltd. v Collector of Central Excise, Jaipur.

3. Application of the Principle of Unjust Enrichment:
The High Court affirmed the Tribunal's findings, stating that the bar of unjust enrichment was not applicable since the excise duty was paid under protest and no duty was payable on the goods. The Court held that the respondent was entitled to a refund as there was no unjust enrichment.

4. Consideration of Findings of Fact by the Tribunal and the High Court:
The appellant argued that the Tribunal and the High Court erred by not considering whether the price included excise duty according to the contract terms. The respondent contended that the Tribunal's findings were factual and should not be interfered with by the Court. The Supreme Court reiterated that the question of whether excise duty had been passed on to the consumer is a factual one. It noted that the Tribunal's findings should be accepted unless there is a significant error or omission of relevant facts.

Conclusion:
The Supreme Court dismissed the appeal, affirming the Tribunal's and the High Court's findings that the respondent had not passed on the excise duty to the railway administration. The Court directed the appellant to comply with the Tribunal's order within four weeks and awarded costs of Rs. 10,000 to the respondent.

The judgment underscores the importance of factual findings by lower courts and tribunals, particularly in cases involving the principle of unjust enrichment and the classification of goods for excise duty purposes.