2024 (2) TMI 665 - AT - Central Excise

Refund of the excess amount that was subsequently refused to be paid to the Appellant by the Refund Sanctioning Authority - Finalization of provisional assessment - Sale through C F Agents/Depot/Consignment agent - Appellant failed to discharge the burden of Unjust Enrichment - HELD THAT - The refundable amount accrued in favour of the Appellant was on account of duty paid by it while making temporary clearance from the depot under Rule 7 and the duty actually received from the customers at the time of sale and clearance of goods to them. There is no dispute that the actual discount or sale at a lesser price was not extended to the customers since, the Assistant Commissioner has noted in his findings at Para 5 that Superintendent had verified the reports and statements concerning clearance of goods at the factory gate and at the C F Agents and submitted his report that discounts were actually passed on by the C F Agents to the dealers, as indicated in their invoices. This being so, the entire amount of excess payment of duty can be considered as borne by the Appellant alone, since duties from the customers/ dealers were actually realized at C F Agents end and paid to the department. In such fulfilment of the procedural requirement there would be hardly any scope that Appellant would be able to collect duty element separately from its customers dealers to compensate the duties paid by it at the ex-clearance from the factory gate. It is apparently keeping these provisions in mind, the provision of refund of differential duty after financial assessment is codified in Rule 7 itself, in which Department would have refunded the amount on its own without any refund application being filed under Section 11(B) of the Central Excise Act, 1944 and burden of examination of passing/non-passing of duly element would have been done by itself. Having regard to the fact that this is a case where refund should have been granted immediately upon final assessment, the following order is passed - Appeal allowed.

Summary

Issues involved: Confirmation of the order of the Refund Sanctioning Authority in not crediting the refund amount to the Appellant's account on the ground of Unjust Enrichment after sanction of refund in respect of difference of payment made during clearance done with provisional assessment to the depot that was finally assessed after the clearance to the Customers.

Facts of the case: The Appellant, a manufacturer of excisable goods, had excess payment of duty amounting to Rs.14,77,688/- noticed in respect of some clearances, and short payment of duty amounting to Rs.9,03,154/- in respect of some other clearances. The Refund Sanctioning Authority refused to pay the excess amount to the Appellant on the ground of Unjust Enrichment. The Appellant appealed to the Commissioner (Appeals) but was unsuccessful, leading to the current appeal.

Appellant's argument: The Appellant's representative argued that the facts of the case were similar to previous cases where refunds were granted to the Appellant. They presented financial documents to demonstrate that the differential duties claimed as a refund were not recovered from or passed on to customers. The representative emphasized that the duty element was not passed on separately to customers, negating the doctrine of unjust enrichment.

Respondent's argument: The Respondent's representative supported the Commissioner (Appeals)'s decision, stating that the Chartered Accountant's certificate was insufficient evidence without invoices and other records. The Respondent argued that the order did not require interference.

Tribunal's decision: The Tribunal noted that the duty was provisionally assessed by the Appellant at the time of clearance from the factory gate, and final assessments were done after clearance to customers. The duty incident was borne by the Appellant alone, and the excess payment of duty was due to variations in clearance prices and quantities. The Tribunal found that the Appellant had not passed on the duty element to customers, making them entitled to the refund. The Tribunal set aside the Commissioner (Appeals)'s order and directed the Respondent-Department to pay the refund amount with applicable interest within three months.

Conclusion: The Tribunal allowed the appeal, overturning the Commissioner (Appeals)'s decision and granting the Appellant a refund of Rs.14,77,688/- with applicable interest, to be paid by the Respondent-Department within three months.