2015 (1) TMI 409 - AT - Central Excise

Denial of refund claim - Unjust enrichment - Finalization of provisional assessment - stock transfer to another unit - Held that - When the clearances were not on sale but were purely on stock transfer basis, there is no question of the Satnoor unit having recovered the incidence of duty from the Abu Road unit and, as such, the bar of unjust enrichment would not apply. There is no undue benefit to the appellant company for the reason that as soon as Satnoor unit filed these refund claim, the Abu Road unit which had taken the Cenvat credit of the duty paid by Satnoor unit had reversed the Cenvat credit equal to the refund amount. It is neither the Department s claim nor any evidence to produce to show that during the period of dispute, the price charged by the Abu Road unit for the final product - ABS Polymer was higher. - In this case, there is no unjust enrichment in the sense that the incidence of duty whose refund has been claimed had been passed on by the appellant unit to Abu Road unit. - Refund allowed - Decided in favour of assesse.

Summary

Issues:
Refund claims hit by unjust enrichment - Stock transfer basis vs. sale basis - Burden of proof on passing on duty incidence.

Analysis:
The case involved the appellant, having two units for manufacturing ABS Polymers, facing a breakdown at the Abu Road unit in November 2011, leading to the transfer of HRG Powder and E-SAN Powder from the Satnoor unit. The assessments were initially provisional due to the inability to determine the cost of production accurately. Subsequently, refund claims were filed and approved by the Assistant Commissioner, finding no unjust enrichment. However, the Commissioner reversed these decisions, alleging unjust enrichment and directing appeals. The Commissioner (Appeals) upheld this view, leading to the appellant's appeals.

Upon hearing both sides, the appellant argued that the clearances were on a stock transfer basis, not a sale, thus no duty recovery occurred. They emphasized that no evidence existed of passing on the duty incidence to customers. The Department contended that once duty was mentioned in the invoices, it was presumed passed on, placing the burden of proof on the appellant. The appellant's reversal of Cenvat credit was cited as insufficient to allow the refund claims.

The Tribunal analyzed the situation, noting the stock transfer nature of the clearances, as evidenced by the invoices. As the clearances were not sales, the unjust enrichment bar did not apply, as no duty incidence was passed on. The Tribunal found no evidence of higher pricing by the Abu Road unit during the dispute period. Refund claims were deemed not hit by unjust enrichment, and the impugned order was set aside, allowing the appeals.

In conclusion, the Tribunal's decision hinged on the distinction between stock transfer and sale clearances, determining the absence of unjust enrichment due to the non-passing of duty incidence. The burden of proof on passing on duty incidence was emphasized, with the Tribunal finding the appellant's actions consistent with a stock transfer scenario, warranting the allowance of the refund claims.