2023 (11) TMI 154 - AT - Central Excise

Refund of duty paid under protest - principles of unjust enrichment - rejection of refund on the ground that the appellants have passed on the incidence of duty to their customers - HELD THAT - Revenue claims that the refund is hit by the doctrine of unjust enrichment i.e. the presumption that the incidence of duty has been passed on by the appellant unless the appellant establishes with documentary proof that the said incidence of duty has been actually borne by him and has not been passed on to the ultimate customers. We find that the presumption contained in the provisions pertaining to refund of Central Excise duty are rebuttable - Hon ble Apex Court in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA 1996 (12) TMI 50 - SUPREME COURT held that A manufacturer who has not passed on the duty can always prove that fact and if it is found that duty was not leviable on the transaction, he will get back the duty paid. Ordinarily speaking, no manufacturer would take the risk of not passing on the burden of duty. It would not be an exaggeration to say that whenever a manufacturer entertains a doubt, he would pass on the duty rather than not passing it on. The Hon ble Supreme Court rendered the above judgment in a different context. However, the observations of the Apex Court throw light on the fact that the presumption vis- -vis doctrine of unjust enrichment is a rebuttable presumption. The appellants have submitted the evidence and argument in their favour. To that extent, it is found that the presumption has been rebutted by the appellants. As a result, it is for the Department to negate the evidence submitted by the appellants. It is found that once the presumption under the doctrine of unjust enrichment is rebutted with documentary evidence, it cannot be negated by another presumption. It can only be negated by producing evidence contrary to the rebuttal of the appellant. Mere stating that the fact of price remaining same will not be an inevitable conclusion to establish that incidence of duty has not been passed on, is not enough. Looking into the facts of the case and other evidence produced by the appellants, the fact of MRP being constant goes in favour of the appellants. Revenue did not rebut this submission by documentary data or evidence, except making a general statement that all taxes and duties would have been considered while fixing the MRP. In the instant case, Revenue has lost sight of the fact that the said MRP was fixed by the appellants during the no-duty regime. Therefore, the very fact of non-upgrading the MRP when the taxes were paid would in itself constitute evidence that the incidence of duty has not been passed on - The ultimate test of passing on the incidence of duty lies in the transaction of the appellants with the ultimate customers i.e. in the transaction between their depot and the customers. The MRP being constant, the test of presumption, that duty must have been inbuilt in MRP and must have been passed on, fails the test of reasonable fairness. Revenue has not even considered the Cost Accountant certificate leave alone countering the same with valid reasons. Cost Accountant has issued the certificate after going through the accounts of the appellants and after satisfying himself about the truthfulness of the same. A certificate given by a professional cannot be dis-regarded unless it is proved to be blatantly wrong and contrary to the facts and evidence available on the hand. Thus, the certificate given by the Cost Accountant has an evidentiary value and cannot be rejected in a half-handed manner - The impugned order having been issued despite the evidence in the form of the certificate and without giving reasons as to why the same has not been taken into account cannot be held to be legally sustainable. Appeal allowed.

Summary

Issues Involved:
1. Whether the refund claim filed by the appellants is hit by the bar of unjust enrichment.
2. Validity and evidentiary value of the Cost Accountant Certificate in substantiating that the incidence of duty has not been passed on to the customers.

Summary:

Issue 1: Whether the refund claim filed by the appellants is hit by the bar of unjust enrichment.

M/s Gillette India Limited challenged the rejection of their refund claim of Rs.1,40,33,307/- for excise duty paid under protest during January to March 2008. The appellants argued that the incidence of duty was not passed on to their customers, supported by a Cost Accountant Certificate and balance sheet entries. The Revenue contended that the duty was included in the MRP and thus collected from customers, invoking the doctrine of unjust enrichment. The Tribunal found that the presumption of passing on the duty is rebuttable and that the appellants had successfully rebutted this presumption with documentary evidence. The Tribunal held that the mere fact that the MRP remained constant before and after the duty imposition supported the appellants' claim that the duty was not passed on.

Issue 2: Validity and evidentiary value of the Cost Accountant Certificate.

The appellants submitted a Cost Accountant Certificate stating that the duty amount was accounted as receivables and not recovered from customers. The Tribunal emphasized that a professional certificate cannot be disregarded without valid reasons and that the onus to disprove it lies with the Department. The Tribunal noted that the Revenue did not challenge the certificate with contrary evidence. The Tribunal cited several precedents where similar certificates were accepted as proof that the incidence of duty was not passed on. Consequently, the Tribunal found that the impugned order was not legally sustainable as it failed to provide specific findings against the Cost Accountant Certificate.

Conclusion:

The Tribunal allowed the appeal, ruling that the refund claim was not hit by the bar of unjust enrichment and that the Cost Accountant Certificate provided sufficient evidence that the incidence of duty was not passed on to the customers.