2010 (4) TMI 449 - AT - Central Excise

Refund Unjust Enrichment - The appellants are engaged in the manufacture of consumer electronic products like Radio-sets. They claimed the benefit of concessional rate of duty in terms of Notification No. 57/93-C.E., dated 28-2-1993 in their classification list effective from 1-3-1993 and accordingly started clearance of their products on payment of duty at the concessional rate of duty, 10% ad valorem. Exemption subsequently granted by Tribunal but refund of duty rejected on the ground of unjust enrichment. Held that CA s certificate of non-recovery of duty loses its probative value, it certified that amount shown as expenses in profit & loss a/c whereas assessee collected cum-duty prices. Further if amount shown in P&L account, it must have been factored into price of goods manufactured. Refund hit by bar of unjust enrichment.

Issues Involved:
1. Eligibility for concessional rate of duty under Notification No. 57/93-C.E.
2. Time-barred refund claims.
3. Unjust enrichment and passing of duty incidence to customers.
4. Validity of Chartered Accountant's certificate and other evidentiary support.
5. Impact of uniformity in price on unjust enrichment.

Detailed Analysis:

1. Eligibility for Concessional Rate of Duty:
The appellants, engaged in the manufacture of consumer electronic products, claimed the benefit of a concessional rate of duty (10% ad valorem) under Notification No. 57/93-C.E. The jurisdictional Assistant Commissioner denied this benefit, directing the appellants to pay duty at 20% ad valorem. The appellants' challenge to this decision was ultimately successful before the Tribunal, which held them eligible for the concessional rate.

2. Time-barred Refund Claims:
The department issued a show-cause notice proposing to reject one of the refund claims as time-barred. However, this issue became moot as the Civil Appeal filed by the department against the Tribunal's decision was dismissed by the Supreme Court, entitling the assessee to claim refunds.

3. Unjust Enrichment and Passing of Duty Incidence:
The primary issue was whether the refund claims were barred by unjust enrichment. The Tribunal examined whether the incidence of the differential duty had been passed on to customers. The appellants argued that there was no change in the price of goods despite the increase in duty, and the amounts were shown as expenses in their Profit & Loss Account. They also provided a Chartered Accountant's certificate stating that the differential duty was not recovered from customers. However, the Tribunal found that the amounts claimed as refund were paid at the time of clearance of the goods and were debited to PLA/RG23A Part II against GPIs/invoices, indicating the duty element separately. The Tribunal concluded that the incidence of the differential duty had been passed on to customers, thus hitting the bar of unjust enrichment.

4. Validity of Chartered Accountant's Certificate and Other Evidentiary Support:
The appellants relied on a Chartered Accountant's certificate and other documents to support their claim that the differential duty was not passed on to customers. However, the Tribunal found that the certificate lacked probative value as it was inconsistent with the appellants' admission that the prices were cum-duty. The Tribunal also noted that the differential duty was shown as expenses in the Profit & Loss Account, implying it was factored into the price of goods.

5. Impact of Uniformity in Price on Unjust Enrichment:
The appellants argued that the uniformity in the price of goods before and after the duty increase indicated that the duty burden was not passed on to customers. The Tribunal rejected this argument, citing judicial precedents that uniformity in price alone does not rebut the presumption of passing on the duty burden. The Tribunal held that the appellants' consistent prices were due to factors other than absorbing the duty burden, such as altering profit margins.

Conclusion:
The Tribunal concluded that the refund claims for Rs. 17,45,42,335/-, Rs. 23,88,558/-, and Rs. 72,98,720/- were barred by unjust enrichment. The appeal was dismissed, and the amounts were ordered to be credited to the Consumer Welfare Fund.

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