2014 (4) TMI 188 - AT - Central Excise

Denial of refund claim - Unjust enrichment - Held that - Appellant in the present case has lost its stand and upheld to the level of Tribunal and filed an appeal there against before the Hon ble Supreme Court which stand accepted by them. There is a huge time gap between the decision of the Tribunal and the decision of the Hon ble Supreme Court. As such, during the relevant period the decisions of the lower authorities were against the appellant holding their activity to be a manufacturing activity liable to pay duty of excise. In such a scenario, a common prudent business man would collect the duty which he was paying on their final product from their customers and would not take the risk of not collecting such duty, and to bear the loss from his pocket, in the case the appeal is dismissed by the highest authority. In these circumstances the onus becomes more heavy on the appellant to be discharged by production of evidence that such duty was not being charged by them from their customers. We do not find any evidence produced by the appellant on record - Following decision of Allied Photographic case 2004 (3) TMI 63 - SUPREME COURT OF INDIA - Decided against assessee.

Summary

Issues:
Refund of excise duty paid by the appellants during a specific period when the activity was contested as manufacturing; Denial of refund claim on grounds of unjust enrichment; Change in invoice pattern by the appellants and its impact on refund claim; Burden of proof on the appellant to show duty was not collected from customers.

Analysis:
The judgment deals with the issue of refund of excise duty paid by the appellants during a period when the activity of cutting marble slabs was under dispute regarding its classification as manufacturing. The Hon'ble Supreme Court ultimately held that the activity did not amount to manufacture. Subsequently, the appellants sought a refund of duty paid on their final product for the relevant period. However, the lower authorities denied the refund claim citing unjust enrichment as the reason, a decision upheld by the Commissioner (Appeals), leading to the current appeal.

Upon reviewing the impugned order, it was noted that the appellants had changed their invoice pattern from a specific date by increasing processing charges, which the lower authorities attributed to the inclusion of central excise duty. The authorities found that the appellants were charging excise duty from their customers, leading to the conclusion that refunding the duty would result in unjust enrichment. This finding was supported by the appellate authority's reliance on various legal precedents, including decisions by the Hon'ble Supreme Court and the Tribunal, emphasizing that continuous pricing in invoices does not necessarily indicate that the duty burden was not passed on to customers.

The judgment highlighted the well-established principle that the burden of proving that the duty for which a refund is sought was not collected from customers lies with the assessee. Despite the appellant's appeal to the Tribunal and subsequently to the Hon'ble Supreme Court, with the latter accepting the appeal, no evidence was presented to show that the duty was not passed on to customers during the relevant period. Given the appellant's change in invoice pattern and the legal precedents cited, the appeal was deemed to lack merit and was rejected. The judgment emphasized the importance of discharging the burden of proof in such cases, especially when there is a significant time gap between lower authority decisions and higher court rulings.