2015 (6) TMI 466 - AT - Central Excise

Denial of refund claim - Unjust enrichment - Held that - When the goods were manufactured and cleared, the duty rates indicated in the invoices were 25% and the said amount was collected from the ultimate consumer. Under the circumstances, it cannot be said that the incidence of duty has not been passed on to the ultimate consumer and was borne by the appellant. - No merit in appeal - Decided against the assessee.

Summary

Issues: Refund of excise duty, classification of product, burden of duty passed on to consumer

Refund of excise duty:
The case involved a manufacturer of self-adhesive PVC insulation tapes who paid duty at a higher rate under protest due to a classification dispute. The manufacturer subsequently filed a refund claim after the matter was settled in their favor. The original authority sanctioned the refund claim but transferred the amount to the Consumer Welfare Fund as per the Central Excise Act. The appellant appealed this decision before the Commissioner (Appeals), who rejected the claim on the grounds of failure to establish that the duty amount was not borne by them.

Classification of product:
The dispute arose from the classification of the product under a particular heading by the Assistant Commissioner, which led to the manufacturer paying duty at a higher rate than originally applicable. The appellant argued that despite paying duty at a higher rate, the price of the product remained the same, indicating that they did not pass on the burden of duty to the consumer. However, the tribunal was not convinced by this argument, stating that the duty rates indicated in the invoices were collected from the ultimate consumer, indicating that the burden of duty was indeed passed on.

Burden of duty passed on to consumer:
The tribunal, after hearing both sides and examining the records, concluded that the duty incidence had been passed on to the ultimate consumer by the manufacturer. Despite the appellant's argument about the price remaining constant, the tribunal found that the duty rates mentioned in the invoices were collected from the consumer, indicating that the burden of duty was not solely borne by the manufacturer. Consequently, the tribunal dismissed the appeal filed by the appellant, upholding the decision of the Commissioner (Appeals) to reject the refund claim.

This judgment highlights the importance of establishing the non-passing of duty burden to consumers when claiming a refund of excise duty, especially in cases where duty rates have been paid at a higher rate than originally applicable due to classification disputes.