2010 (8) TMI 495 - AT - Central Excise

Refund claim - Unjust enrichment - The appellants are the manufacturer of machinery parts thereof - They supplied their finished product to 100% EOU - The appellants were by mistake paid Central Excise duty on the said clearance - The CA Certificate clearly shows that the duty incidence has not been passed on the buyer - Moreover, as per the financial records produced before the Commissioner (Appeals), it was cleared that the appellant has shown in their financial records that the disputed amount is recoverable from the department - It is clear that the Chartered Accountant Certificate and the extract of the documents produced before the Commissioner (Appeals) clearly shows that the duty incidence has not been passed upon the buyer - Accordingly, the observation made by the Commissioner (Appeals) that evidence has not been produced is totally incorrect he impugned order is set aside - Hence, refund claim is allowed.

Summary

Issues:
Appeal against denial of refund claim based on unjust enrichment.

Analysis:
The appellant, a manufacturer of machinery parts, filed an appeal against the denial of their refund claim by the Commissioner (Appeals) on the grounds of unjust enrichment. The appellants supplied finished products to 100% EOU units without paying Central Excise duty, but issued duty paid invoices to buyers due to an oversight. Upon realizing this error, they issued credit notes to buyers and sought a refund. The Dy. Commissioner allowed the refund claim, but the Commissioner (Appeals) rejected it, stating the appellants failed to prove that duty was not passed on to buyers. The Tribunal remanded the matter back to the Commissioner (Appeals) for reconsideration in light of a Chartered Accountant's Certificate. The Commissioner (Appeals) again rejected the refund claim, leading to the appellant's appeal before the Tribunal.

The appellant argued that they inadvertently issued duty paid invoices and debited duty in their account, but upon realizing the error, issued credit notes and filed a refund claim. They contended that no payment was received against the duty mentioned in the invoices, and they had not passed on the duty incidence to buyers. The appellants provided CA Certificates, Balance sheet, and Ledger Accounts to support their claim that the amount was recoverable from the department.

After hearing both sides, the Tribunal examined the submissions and records. It noted that the CA Certificate and financial records indicated that the duty incidence was not passed on to buyers. The Commissioner (Appeals) had requested further evidence without specifying the documents required, despite the appellant providing details of recoveries made and transfers to Excise Deposits Account. The Tribunal found that the appellant had discharged their burden of unjust enrichment by presenting the necessary evidence, including the CA Certificate and ledger entries. Consequently, the Tribunal set aside the impugned order, allowed the refund claim, and disposed of the appeal in favor of the appellant.