2024 (4) TMI 859 - AT - Central Excise

Refund claim - rejection on the grounds of unjust enrichment - requirement to be credited to Consumer Welfare Fund constituted under Section 12C of Central Excise Act 1944 - HELD THAT - It is quite evident that the appellant has categorically stated in the letter that they are charging the central excise duty from their customer, while maintaining the selling price at the same level by increasing the discount given from 40% to 52.10%. Undisputedly appellant himself admits that they are charging the central excise duty from their customers. That being so the burden of duty paid has been passed on the customer. The reason for giving additional discount to the customers can be many including the product competitiveness. Appellant have argued that they had increased the discount percentage on the goods so that the burden of duty is not passed on. However this argument though attractive is without any merits. From the table in para 4.11 it is evident that for determination of the assessable value they have claimed deduction of 40% or 52.10% whereas the price of the goods to the customer remained the same. What they have recovered from the customers is the price of the goods and not the cum duty price. Above analysis clearly establishes that the appellant has passed on the burden of the duty paid on to their customers. In case of COMMISSIONER OF C. EX., MUMBAI-II VERSUS ALLIED PHOTOGRAPHICS INDIA LTD. 2004 (3) TMI 63 - SUPREME COURT , Hon ble Supreme Court has held even on merits, the respondent has failed to make out a case for refund. Since relevant factors stated above have not been examined by the authorities below, we do not find merit in the contention of the respondent that this Court should not interfere under Article 136 of the Constitution in view of the concurrent finding of fact. If on examination of facts and documents the conclusion is that burden of the duty has been passed on to the customers the refund could not have been directed to the appellants but would have to be credited to the consumer welfare fund. There are no merits in this appeal - appeal dismissed.

Summary

Issues Involved:
1. Classification of Ayurvedic Medicaments.
2. Refund claim and unjust enrichment.
3. Consideration of invoices and letters by the tribunal.

Summary:

1. Classification of Ayurvedic Medicaments:
The Appellant, engaged in the manufacture of Ayurvedic Medicaments, declared their products under Chapter sub-heading 3003.03 of the Central Excise Tariff Act 1985. The revenue contended that the products should be classified under Chapter Heading 3305. A show cause notice was issued, and the Commissioner, Central Excise, Lucknow adjudicated the case, holding the goods classifiable under heading 3305. The Tribunal allowed the appeal on limitation, leaving the classification issue unsettled. The Hon'ble Supreme Court later classified the products under Chapter Heading 3003.30.

2. Refund Claim and Unjust Enrichment:
During the pendency of the appeal before the Supreme Court, the Appellant deposited Rs. 5,51,739/- under protest. Post the Supreme Court decision, the Appellant filed a refund claim. The Assistant Commissioner rejected the refund claim on grounds of unjust enrichment, stating that the invoices showed Central Excise Duty (CED) @ 16% charged from customers. The Appellate Authority/Commissioner (Appeals) dismissed the appeal, and the Tribunal upheld the rejection, stating that the burden of duty was passed on to the customers. The Hon'ble High Court remanded the matter back to the tribunal for reconsideration.

3. Consideration of Invoices and Letters by the Tribunal:
The Appellant argued that for certain periods, no duty was charged or shown on invoices, and for other periods, discounts were given to set off the duty amount. They submitted letters and documents to prove that the duty burden was absorbed by them. The Tribunal noted that the Appellant had not conclusively shown that the duty burden was absorbed and that the prices remained the same before and after duty payment. The Tribunal, following the principles from various judgments, including Allied Photographics India Ltd. and CEAT Ltd., concluded that uniformity in prices does not imply non-passing of duty burden. The Tribunal dismissed the appeal, holding that the burden of duty was passed on to the customers, and the refund claim was rightly rejected on grounds of unjust enrichment.

Conclusion:
The appeal was dismissed, and the order to credit the refund amount to the Consumer Welfare Fund was upheld, as the Appellant failed to prove that the duty burden was not passed on to the customers. The Tribunal emphasized the need for clear evidence to rebut the presumption of duty passing u/s 12B of the Central Excise Act, 1944.