2010 (1) TMI 408 - AT - Central Excise

Refund- The brief facts of the case are that the respondents are engaged in the manufacture of excisable goods namely parts and accessories of Motor Vehicles Wheel Rims, Bicycle/Cycle Rims and seat cushion. The respondents filed a refund claim under Section 11AB of the Central Excise Act, 1944. Since the respondents being SSI unit were filing classification declaration from time to time, claiming therein benefit of partial exemption of Notification No. 38/97, dated 27-6-97 and 9/98 dated 2-6-98, they have paid Central Excise duty on their excisable goods. The Deputy Commissioner rejected the claim on the ground that the refund claim is premature. Held that- incidence of duty not passed on to buyers, no unjust enrichment. Refund allowed.

Summary

Issues:
Appeal against Commissioner (Appeals) order regarding refund of duty paid under protest without lawful demand confirmation.

Analysis:
The case involved the appeal by the Revenue against the Commissioner (Appeals) order granting refund of duty paid by the appellants under protest without any lawful demand confirmation. The respondents, engaged in manufacturing excisable goods, had filed a refund claim under Section 11AB of the Central Excise Act, 1944. The dispute arose when the preventive staff pointed out lapses and irregularities during a visit, leading to the payment of differential duty by the respondents under protest. The Deputy Commissioner rejected the refund claim as premature, prompting the respondents to appeal before the Commissioner (Appeals), who allowed the appeal. The main contention was the absence of passing the duty element to buyers, justifying the refund claim. The Commissioner (Appeals) found in favor of the respondents, emphasizing the absence of final decision on the protest, lack of demand notice, and non-determination of due duty. The refund claim was deemed valid, supported by certificates from the appellant and buyers, negating undue enrichment.

The Revenue, aggrieved by the Commissioner (Appeals) decision, argued that the duty incidence was passed on to buyers through supplementary invoices, invoking the doctrine of unjust enrichment. The Revenue cited various decisions to support its stance. On the other hand, the respondents contended that the duty was paid under protest due to denial of exemption notification, and the buyers did not avail credit for the duty paid. The respondents sought the refund, asserting that the duty incidence was not transferred to buyers. After hearing both sides, the Tribunal considered the arguments. The Revenue relied on cases where duty incidence was passed on to consumers, while the respondents cited a case where buyers did not pay the duty as per invoices, and refunds were granted without unjust enrichment. The Tribunal found the Revenue's reliance misplaced, as in the present case, the duty was paid under protest after goods clearance, and buyers confirmed not availing credit for the duty.

In conclusion, the Tribunal upheld the Commissioner (Appeals) order, dismissing the Revenue's appeals. The Tribunal found no fault in the decision, as the duty incidence was not passed on to buyers, aligning with the respondents' position. The case highlighted the importance of examining whether duty incidence was transferred to buyers and the applicability of the doctrine of unjust enrichment in refund claims.