2014 (9) TMI 369 - HC - Central Excise

Denial of refund claim - Unjust enrichment - invoice showed composite price - Transfer of burden of duty to customer - Whether the Tribunal below committed substantial error of law in setting aside the order passed by the Commissioner of Appeals on the question of unjust enrichment by totally overlooking the fact that the assessee s invoice showed composite price, and duty was not indicated separately and sale price before as well after reclassification remained the same - Held that - finding of the adjudicating authority holding against the petitioner was not justified inasmuch as the same was arrived at by overlooking cogent evidence and material produced by the appellant in support of its contentions that it had not passed on the burden of duty to the buyers of the goods. The invoices evidencing the sale, which were on record, showed that the price charged did not include therein the Central Excise duty component. The assessee also produced certificate from the different buyers of its goods to the effect that the buyers had not recovered the duty for sale of appellant s finished goods. In addition thereto, the certificate issued by the Chartered Accountant who had audited the accounts including the accounts for the period from 1-8-1982 to 31-12-1986, it was established that the Central Excise duty from the buyers of the finished goods were no collected, there was no passing over of the duty to the consumers and there was no unjust enrichment. - Decided in favour of assessee.

Summary

Issues:
Appeal against Tribunal's order on unjust enrichment in tax appeal under Section 35G of Central Excise Act, 1944.

Detailed Analysis:

1. Background and Appeal: The appeal raised a substantial question of law regarding unjust enrichment, challenging the Tribunal's order dated 29-9-2010. The appellant's claim for refund of duty was initially rejected on grounds of time-barred claims and unjust enrichment. The Assistant Commissioner accepted the classification under Heading 25(8) in 1991. The Tribunal dismissed the appeal, leading to subsequent legal proceedings.

2. Unjust Enrichment Issue: The Tribunal remanded the matter to the original adjudicating authority for examination of unjust enrichment. The appellant contended that the remand was unnecessary given the extensive history of litigation and evidence supporting the non-passing of duty burden to buyers. The Tribunal's decision to remand was criticized for prolonging the litigation unnecessarily.

3. Evidence and Arguments: The appellant presented invoices indicating composite prices without a separate duty component. The Chartered Accountant's certificate supported the claim that duty burden was not transferred to buyers. The Tribunal's failure to consider this evidence was highlighted, emphasizing that the duty element was not passed on to consumers.

4. Legal Precedent and Findings: Referring to the Madras High Court case of Dollar Co. v. G.O.I., it was established that when invoices show composite prices and duty is not separately indicated, the duty burden is not passed on to consumers. The sale price before and after reclassification remained the same, indicating no unjust enrichment. The Chartered Accountant's certificate and customer letters further supported this conclusion.

5. Court's Decision: The High Court found in favor of the appellant, ruling that the Tribunal erred in setting aside the Commissioner's order on unjust enrichment. The Court emphasized the significance of the evidence, particularly the composite pricing in the invoices, in determining the non-passing of duty burden. The appeal was allowed based on the evidence presented and the legal precedent cited.

In conclusion, the High Court's judgment addressed the issue of unjust enrichment in the context of Central Excise Act, 1944, emphasizing the importance of evidence such as invoices and expert certificates in determining the non-passing of duty burden to buyers. The decision highlighted the need for thorough consideration of evidence and legal precedents in resolving tax appeals involving complex issues like unjust enrichment.