2014 (12) TMI 944 - AT - Central Excise

Denial of refund claim - Unjust enrichment - Held that - In the order dated 31-8-2010 while sanctioning the refund, the jurisdictional Assistant Commissioner has clearly recorded that the documents governing the transactions for the period January to March, 2009 had been verified by the jurisdictional Range Officer, who had returned the refund claim with the remarks that the appellant had paid excess duty to the extent of ₹ 30,90,857/-. Further, vide letter dated 13-8-2010, the jurisdictional Range Officer has also reported that unjust enrichment clause is not involved, inasmuch as the appellant has borne the incidence of duty and the said duty incidence had not been passed on to any other person. In view of the verification done by the jurisdictional Range Officer, it is not understandable how the Revenue can take a plea that the appellant has not crossed the bar of unjust enrichment. There is no evidence adduced or forthcoming from the Revenue showing that the appellant has passed on the incidence of duty to their buyers. In fact all the invoices for the transaction issued from factory as also from the depot were verified by the Range Officer, who after verification has reported that the appellant has borne the incidence of duty and has not passed on the incidence to any other person. In view of this clear finding recorded by the jurisdictional Ranger Officer, the appellant was rightly entitled for the benefit of refund. - Decided in favour of assesse.

Summary

Issues:
- Discharge of excise duty on a provisional basis under Rule 7 of the Central Excise Rules, 2002.
- Finalization of provisional assessment based on sale price of goods.
- Calculation of differential duty for final assessment.
- Refund claim for excess duty paid.
- Verification of refund claim by jurisdictional authorities.
- Consideration of unjust enrichment clause.
- Sanctioning of refund by Assistant Commissioner.
- Appeal by Revenue challenging refund sanction.
- Denial of refund by appellate authority.
- Challenge of denial of refund by appellant.

Analysis:
The appellant, a manufacturer of Iron & Steel products, used to stock transfer goods to their depots and discharge excise duty liability on a provisional basis under Rule 7 of the Central Excise Rules, 2002. The issue arose when the Commissioner (Appeals) held that the nearest date for assessment should be either prior to or subsequent to the removal of goods from the factory. This resulted in the appellant discharging excess duty, leading to a refund claim of Rs. 30,90,857. The jurisdictional authorities verified the claim and confirmed the excess duty payment and absence of unjust enrichment. The Assistant Commissioner sanctioned the refund, allowing the appellant to take credit in their Cenvat account. However, the Revenue challenged this sanction, claiming unjust enrichment. The appellate authority sided with the Revenue, leading to a demand for repayment of the refund amount. The appellant contested this decision, arguing that they had not passed on the duty burden and had verified invoices to support their claim.

The appellate tribunal considered the submissions of both parties and noted that the jurisdictional Range Officer had verified the transactions and confirmed that the appellant had paid excess duty without passing on the burden to others. The tribunal found no evidence from the Revenue to support the claim of unjust enrichment. As all invoices were verified, and the appellant had not passed on the duty burden, the tribunal concluded that the appellant was entitled to the refund. Therefore, the tribunal allowed the appeal, setting aside the decision of the lower appellate authority that denied the refund to the appellant.