2005 (7) TMI 223 - AT - Central Excise

Summary

Issues:
Challenge to Order-in-Appeal rejecting refund claim based on unjust enrichment principle.

Analysis:
In this appeal, the appellants contested the Order-in-Appeal that denied their refund claim of rupees 2,05,032/- by invoking the unjust enrichment principle. The appellants argued that they had not passed on the duty incidence to the buyers, as required under Section 11B of the Act. They cleared goods under a Prompt Payment Discount Scheme, where distributors deducted discount and duty before making payment. The net amount received was less than what was invoiced, indicating that duty incidence was not transferred to the distributors. The Commissioner (Appeals) rejected the claim, but the Tribunal found in favor of the appellants, citing similar precedents where refunds were allowed under comparable circumstances. The Tribunal emphasized that the subsequent issuance of credit notes was to reconcile accounts, not to refund duty already collected. The Tribunal distinguished this case from other judgments where price fluctuations or credit notes issuance did not absolve the duty incidence.

The Tribunal highlighted that the M.R.F. Ltd. case, where price fluctuations post-clearance were not considered for refund, did not apply here as there was no price reduction. Additionally, the Grasim India case, which stated that credit notes issuance did not indicate duty incidence borne by the supplier, was deemed irrelevant in this context. The Tribunal concluded that the appellants had met the criteria for refund as they had not passed on the duty incidence to the buyers. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief as per law.