2017 (7) TMI 981 - AT - Central Excise

Refund of Central Excise Duty - denial on the ground of unjust enrichment - Held that - the certificates issued by the customers indicated that the respondents were reimbursed only as much duty as was paid by respondent to the exchequer. Further, Revenue has not brought forward any reason as to why provision under Rule 7(6) of Central Excise Rules was invokable in spite of such clear finding by the ld. Commissioner (Appeals) - in case of any change in Purchase Order no surplus amount has been paid and that any excess/short amount paid earlier had been adjusted against supplementary/further bills of ITI - refund allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Appeal against Order-in-Appeal No.379-381-CE/LKO/2012 dated 27/08/2012.
2. Refund claim of Central Excise duty rejected on grounds of unjust enrichment.
3. Interpretation of Rule 7(6) of Central Excise Rules.
4. Whether duty incidence passed on to customers.
5. Cross Objection filed by respondent.

Analysis:
1. The appeal was filed by Revenue against Order-in-Appeal No.379-381-CE/LKO/2012 dated 27/08/2012 passed by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Lucknow. The respondent, engaged in the manufacture of Transmission Equipments, requested provisional assessment under Rule 9B of the Central Excise Rules, 1944 due to non-finalization of rate contract prices for supply to the Department of Telecommunication (DOT). Assessments for various financial years were finalized, resulting in excess Central Excise duty payments by the respondent. The refund claims were rejected by the Original Authority based on unjust enrichment grounds. However, the Commissioner (Appeals) set aside these rejections, allowing the refund to the respondent. Revenue appealed against this decision.

2. The main ground of appeal raised by Revenue was the applicability of Rule 7(6) of Central Excise Rules concerning unjust enrichment. The Revenue argued that the refund claim was not sustainable due to this specific provision. The Commissioner (Appeals) had found that the duty incidence was not passed on to customers, as evidenced by certificates issued by customers indicating reimbursement of the same amount of duty paid by the respondent. The Counsel for the respondent supported this finding, stating that the Revenue's argument was untenable in light of the clear evidence presented.

3. Upon considering the contentions, the Tribunal found that the Commissioner (Appeals) had carefully examined the documents and records, concluding that customers reimbursed the exact duty amount paid by the respondent, thus negating unjust enrichment. The Tribunal noted that Revenue failed to provide any valid reason for invoking Rule 7(6) despite the Commissioner's findings. Additionally, the respondent submitted a certificate confirming no surplus payments and adjustments made against further bills. Consequently, the Tribunal deemed Revenue's grounds unsustainable and rejected the appeal, disposing of the Cross Objection as well.

This detailed analysis highlights the key issues and the Tribunal's reasoning behind the decision, emphasizing the application and interpretation of relevant legal provisions in the context of the case.