2014 (2) TMI 725 - SC - Central Excise

Denial of refund claim - unjust enrichment - Refund of the excess differential amount - Whether the respondent assessee has indeed recovered the excess amount from the consumers - Held that - there was no question of assessee having recovered the excess amount from the consumers. This is so because, the assessee throughout asserted, that so far as Tyre Cord Fabrics are concerned, the duty payable was under Heading No.59.02 of the classification effective from 01.08.1986 whereunder only basic excise duty was payable. In view of the above, it is obvious that the assessee did not recover any duty from the consumers under Heading No.59.09 at least till the show cause notice was issued on 25.02.1993. Accordingly, whatever amount was recovered from the assessee by the appellants, could not have been been required to be refunded to the consumers - Following decision in ommissioner of Central Excise, Hyderabad vs I.T.C.Ltd. 2004 (12) TMI 90 - SUPREME COURT OF INDIA - Decided against Revenue.

Summary

Issues:
Dispute over excise duty classification under Heading No.59.09 vs. Heading No.59.02; Refund of excess differential amount recovered by the respondent assessee from the Excise Department to consumers.

Analysis:
The judgment by the Supreme Court involved a dispute regarding the classification of excise duty under Heading No.59.09 versus Heading No.59.02 of the Schedule to the Central Excise Tariff Act. The respondent consistently argued that the item in question fell under Heading No.59.02, attracting only basic excise duty and not special excise duty. The case originated from a show cause notice issued in 1993, requiring the respondent to pay duty under Heading No.59.09. The respondent complied by paying the differential excise duty under Heading 59.09 for a specific period. However, it was later established that the duty was payable under Heading No.59.02. The main issue in the civil appeal was the refund of the excess amount recovered by the respondent from the Excise Department to the consumers.

Regarding the refund issue, the Court examined whether the respondent had actually recovered the excess amount from the consumers. It was found that the respondent had consistently maintained that duty for Tyre Cord Fabrics was payable under Heading No.59.02, not under Heading No.59.09. As a result, it was concluded that the respondent had not collected any duty from the consumers under Heading No.59.09 until the show cause notice was issued in 1993. Therefore, the amount recovered from the respondent by the appellants did not need to be refunded to the consumers. The Court dismissed the appeal, finding no merit in the arguments presented.

Additionally, the judgment also addressed a Special Leave Petition (SLP) related to the case. The Court referred to a previous decision in Commissioner of Central Excise, Hyderabad vs. I.T.C. Ltd. and dismissed the SLP based on that precedent. Another SLP was dismissed in line with the decision made in the earlier SLP. The delay in the latter SLP was condoned, and the petition was subsequently dismissed. The judgments provided clarity on the excise duty classification issue and the refund of excess amounts, setting a legal precedent for similar cases in the future.