2016 (9) TMI 841 - AT - Central Excise

Refund claim - unjust enrichment - cement was cleared at 12% instead of 8% on 7th and 8th December, 2008 - Rate of duty on cement was reduced from 12% to 8% of RSP w.e.f 07-12-2008 - Held that - when the Chartered Accountants certificate has certified that the cement was dispatched to depots and not to end customer and that the depots are neither registered under Central Excise Act nor have issued any Central Excise invoices, unless the department has evidence or proof to the contrary, it cannot be concluded without basis that incidence of duty has been passed on to the customers requiring the claimed amounts to be credited to CWF. This being so, the appellants were very much eligible for being refunded the amount of ₹ 10,23,618/- being excise duty inadvertently paid on 7th and 8th December 2008 at pre-revised rates of duty. - Decided in favour of appellant

Summary

Issues:
Refund claim of excess duty paid on cement clearances due to software error; Application of principles of unjust enrichment; Acceptability of Chartered Accountant certificate as proof of no unjust enrichment.

Analysis:
The appellant, engaged in cement manufacturing, cleared cement at a higher duty rate due to a software error, resulting in excess payment of duty. The appellant claimed a refund of the excess duty paid. The department rejected the refund claim, citing the appellant's failure to prove that the duty had not been passed on to the buyer. The appellant argued that as duty was paid over and above the retail sale price, recovery of duties would not arise. They contended that principles of unjust enrichment do not apply when goods are sold under the maximum retail price (MRP) or at a composite rate to customers. The appellant also presented a Chartered Accountant certificate stating no unjust enrichment had occurred.

The tribunal noted that the Chartered Accountant certificate confirmed that the cement was dispatched to depots, not directly to end customers, and that the depots were not registered under the Central Excise Act. The tribunal held that unless the department had evidence to the contrary, it could not be assumed that the duty had been passed on to customers. The tribunal found the appellant eligible for a refund of the excise duty inadvertently paid at the higher rate due to the software error. The tribunal set aside the lower authority's decision and allowed the appeal, directing the refund of the excess duty paid.

In conclusion, the tribunal ruled in favor of the appellant, emphasizing that in the absence of evidence proving unjust enrichment, the appellant was entitled to the refund of the excess duty paid. The tribunal highlighted the importance of considering all relevant evidence, such as the Chartered Accountant certificate, in determining the applicability of unjust enrichment principles.