2018 (4) TMI 611 - AT - Central Excise

Refund claim - finalization of provisional assessment - unjust enrichment - captive consumption - time bar - Held that - refund claim was filed admittedly within one year from date of submission of CAS-4 certificate, only on obtaining CAS-4 certificate appellant could established excess payment of duty - the refund claim filed after finalisation of the price i.e. on submission of CAS-4 certificate, refund is well within time period of one year - refund claim is not time barred. Unjust enrichment - submission of the appellant is that since the goods were cleared to their own unit which amounts to captive consumption there is no sale of the goods, hence the incidence of duty paid in excess was not passed on - Held that - even in respect of captive consumption, unjust enrichment provision is applicable as held by Hon ble Supreme Court inc case of Union of India vs. Solar Pesticides Pvt. Ltd. 2000 (2) TMI 237 - SUPREME COURT OF INDIA - it is obvious that when the goods is sold all the cost of raw material including taxes, duties thereof is considered for arriving at the cost of final product. Since the appellant and the recipient unit are under the same umbrella of one company, balance sheet of company consist of final sale transaction takes place by all the units therefore whether there is sale between appellant and their own recipient unit or otherwise that cannot be sole factor to decide that there is no unjust enrichment - the factual matrix has to be ascertained that whether excess duty paid by the appellant was absorbed in the value of the Pan Masala and Gutkha, only thereafter it can be established that whether the incidence of duty has been passed on to any other person or otherwise. Since no exercise has been carried out on this factual aspect, in the interest of justice one opportunity can be extended to the appellant to prove that incidence of excess paid duty has not been passed on or otherwise - appeal allowed by way of remand.

Summary

Issues:
1. Time bar on refund claim
2. Unjust enrichment regarding the incidence of duty

Analysis:

Issue 1: Time bar on refund claim
The case involves a dispute regarding the time bar on a refund claim filed by the appellant. The appellant, a manufacturing company, discharged excise duty based on Rule 8 of the Central Excise (Valuation) Rules, 2000, which requires paying duty on a value of 110% of the cost of production. The cost of production is determined by CAS-4, making the final value uncertain at the time of clearance. The appellant sought provisional assessment, but the department insisted on valuation as per CAS-4. The appellant later filed a refund claim due to excess payment of duty after finalizing the value based on CAS-4. The issue was whether the refund claim, filed within one year of obtaining the CAS-4 certificate, was time-barred. The tribunal held that the refund claim was not time-barred as the final price could only be determined upon submission of CAS-4, and the claim was filed within the stipulated period.

Issue 2: Unjust enrichment regarding the incidence of duty
The second issue revolved around unjust enrichment concerning the duty incidence. The appellant argued that since the goods were supplied to their own units for manufacturing Pan Masala and Gutkha, there was no sale, and thus, no passing on of duty incidence. However, the Revenue contended that even for captive consumption, the test of unjust enrichment applied. The tribunal noted that the cost of input supplied by the appellant was included in the value of the final products manufactured by the recipient units. The tribunal emphasized that the factual aspect of whether the excess duty paid was absorbed in the value of the final products needed verification. Therefore, the tribunal remanded the case to the adjudicating authority to determine whether the duty incidence was passed on, considering the commercial transactions and the company's overall balance sheet.

In conclusion, the tribunal ruled in favor of the appellant regarding the time bar on the refund claim but remanded the case for further examination on the issue of unjust enrichment to ascertain whether the excess duty paid was passed on to any other person.