2014 (6) TMI 308 - HC - Central Excise

Refund claim - Unjust enrichment - price inclusive of duty of excise - maintaining uniformity of price - duty paid under protest - Held that - Admittedly, till January 2001, the assessee was paying excise duty at a lower rate. For the months of January and February 2001, the assessee was forced to clear the goods under heading 2404.90 at a higher rate. This was done under protest. The assessee also established that the sale price of the goods, despite this change in the duty rate that the assessee charged from the consumers, remained the same. This aspect has been gone into by the Tribunal at a considerable length. In the impugned judgment, the Tribunal compared the different invoices for the period between January-February 2001 and immediately before that. The Tribunal found that despite assessee paying considerably higher rate of excise duty and correspondingly higher duties of special excise and additional excise duties, the price inclusive of taxes remained the same. This aspect the assessee established to the satisfaction of the Deputy Commissioner and the Commissioner also. Even these authorities did not dispute that despite increase in the Excise duty and corresponding increase in the additional duties, the goods were sold by the assessee to the consumers exactly at the same price as were being sold prior to January 2001. - considering additional material on record, the assessee, as held by the Tribunal, had succeeded in establishing that the burden of higher duty was not passed on to the consumers. The Deputy Commissioner and Commissioner both simply brushed aside the evidence on record by holding that merely because the price structure has not changed, the burden on the assessee cannot be stated to have been discharged. When we find that in addition to such constant price structure there were other factors having a bearing on the issue, the said authorities could not have rejected the refund claim. The assessee having discharged the burden of establishing the necessary requirement, if the Departmental authorities desired to examine the issue from any other angle or required additional material to satisfy whether the uniformity in the price structure is attributable solely to the assessee absorbing the additional burden of duty or on some other fortuitous circumstances independent of the question of the assessee absorbing such burden, the authority could and ought to have made further inquiries with the assessee. The decision of the Supreme Court in case of Allied Photographics India Ltd. (2004 (3) TMI 63 - SUPREME COURT OF INDIA) does have application to the case on hand, in view of other additional facts and circumstances, the Tribunal committed no error in allowing the assessee s appeal.Decided against Revenue.

Summary

Issues Involved:
1. Whether the Tribunal erred in holding that the burden of duty had not been passed on to the dealers/buyers.
2. Whether the Tribunal erred in holding that the principle of "unjust enrichment" is not applicable due to the respondent's affidavit.
3. Whether the Tribunal erred in ignoring the Supreme Court's ratio in CCE v. Allied Photographic India Ltd. regarding uniformity of price before and after assessment.

Issue-wise Detailed Analysis:

1. Burden of Duty Passed on to Dealers/Buyers:
The Tribunal's judgment was challenged by the Commissioner, Central Excise & Customs, Vadodara, arguing that the burden of duty was passed on to the dealers/buyers. The Deputy Commissioner and Commissioner had concluded that the duty was shown separately in the invoices, indicating that it was recovered from the customers. The Tribunal, however, found that the price of goods remained unchanged before and after the duty increase, suggesting that the duty burden was not passed on to the customers. The Tribunal also considered an affidavit from the respondent's officer stating that the duty was not passed on. The High Court upheld the Tribunal's findings, noting that the price stability and supporting affidavit were sufficient to establish that the duty burden was not passed on to the customers.

2. Principle of "Unjust Enrichment":
The Tribunal held that the principle of "unjust enrichment" did not apply because the respondent had filed an affidavit stating that the duty burden was not passed on to the customers. The Deputy Commissioner and Commissioner had rejected the refund claim, arguing that the duty was shown separately in the invoices and thus collected from the customers. The Tribunal, however, found that the price of goods remained the same, and the respondent absorbed the duty burden. The High Court agreed with the Tribunal, emphasizing that the unchanged price and the affidavit were sufficient to prove that the duty burden was not passed on, and thus the principle of "unjust enrichment" did not apply.

3. Ignoring Supreme Court's Ratio in CCE v. Allied Photographic India Ltd.:
The Tribunal was accused of ignoring the Supreme Court's decision in CCE v. Allied Photographic India Ltd., which held that uniformity of price before and after assessment does not conclusively prove that the duty burden was not passed on to the buyers. The High Court acknowledged the relevance of the Supreme Court's decision but noted that the Tribunal had considered additional factors, such as the affidavit and the unchanged price despite the duty increase. The High Court concluded that the Tribunal did not err in its judgment, as the respondent had provided sufficient evidence to prove that the duty burden was not passed on to the customers.

Conclusion:
The High Court dismissed the Revenue's appeal, affirming the Tribunal's decision. It held that the Tribunal correctly found that the burden of duty was not passed on to the customers and that the principle of "unjust enrichment" did not apply. The High Court also acknowledged the relevance of the Supreme Court's decision in CCE v. Allied Photographic India Ltd. but found that the Tribunal had considered additional factors that justified its conclusion. The High Court answered the substantial questions of law in favor of the respondent-assessee and dismissed the Revenue's appeal.