2024 (6) TMI 1008 - HC - Central Excise

Refund - Principles of unjust enrichment - Return of excise duty recovered from M/s Archana Industries - whether the appellant had successfully rebutted the presumption that the incidence of duty was not passed on to the buyer under section 12B of the Central Excise Act? - HELD THAT - The appellant is not denying this fact but submitted that those amounts paid as duty had been adjusted later on in sale consideration but in the considered opinion of all the authorities and learned tribunal burden has not bee duly discharged by the appellant. Initially, the sale price and excise duty were paid by way of cheques, thereafter the appellant started receiving by way of cash - The Adjudicating Authority, while adjudicating the case of refund examined the accounts of the appellant and gave a finding of fact that the duty had been recovered from the customer by the appellant. Therefore, the appellant has not come out from the rigour of S. 12B of the Act. The appellant has only placed reliance on the certificate issued by the CA which is contrary to the invoices, hence the same is not liable to be relied on - the ledger accounts of relevant periods were filed, which also nowhere established that this excise duty was charged but later on adjusted. Hence concurrent finding of facts cannot be interfered in this appeal. The question of law which is framed is also a question of fact, not a pure question of law on which the findings can be reversed. The invoices that came on the record clearly indicate that the appellant collected the excise duty from the buyer and paid it to the excise department and if it is refunded to the appellant, that would be an unjust enrichment to him. Hence, the same has rightly been directed to be credited to the consumer welfare fund as contemplated under section 11B. In the case of GAIL (INDIA) LTD. VERSUS COMMISSIONER CENTRAL EXCISE AND CUSTOMS, MANIK BAGH PALACE, INDORE (MADHYA PRADESH) 2023 (10) TMI 879 - MADHYA PRADESH HIGH COURT , this Court has disbelieved the certificate issued by the Chartered Accountant and maintained the order of the Adjudicating Authority, Appellate Authority and CEGATE rejecting the claim of refund of the amount. However, in the present case, the refund has been allowed but instead of giving it to the appellant, the Authority has directed to credit the said amount to the consumer welfare fund. Appeal dismissed.

Issues Involved:

1. Applicability of excise duty on the sale of packing material (M.S. Drums).
2. Entitlement to a refund of excise duty paid under protest.
3. Rebuttal of the presumption under Section 12B of the Central Excise Act, 1944.
4. Credibility of certificates issued by the Chartered Accountant and buyer.
5. Application of the principle of "Unjust Enrichment".

Issue-wise Detailed Analysis:

1. Applicability of Excise Duty on Sale of Packing Material (M.S. Drums):

The appellant, engaged in the manufacturing of PU Foam products, contended that excise duty was not applicable on the sale of M.S. Drums as they were not purchased as input. Despite this, the Central Excise Department issued several show-cause notices demanding excise duty, which the appellant paid under protest from 20/5/2000 to 13/9/2002.

2. Entitlement to Refund of Excise Duty Paid Under Protest:

The appellant sought a refund of Rs. 4,45,825/- for the duty paid on M.S. Drums, supporting the claim with account statements and a certificate from M/s Archana Industries, asserting no excise duty was paid to the appellant. The Dy. Commissioner adjudicated in favor of the appellant but directed the amount to be credited to the Consumer Welfare Fund, a decision affirmed by the Commissioner (Appeals) and the Customs, Excise, and Service Tax Appellate Tribunal (CEGAT).

3. Rebuttal of the Presumption Under Section 12B of the Central Excise Act, 1944:

The core issue was whether the appellant successfully rebutted the presumption under Section 12B that the incidence of duty was passed on to the buyer. The adjudicating authority examined invoices showing excise duty charged to M/s Archana Industries. Despite the appellant's claim that the duty was adjusted in the sale price, the authorities concluded that the burden was not duly discharged, as the appellant initially received payments via cheques and later in cash, indicating continued receipt of duty from customers.

4. Credibility of Certificates Issued by the Chartered Accountant and Buyer:

The appellant relied on certificates from M/s Archana Industries and their Chartered Accountant, asserting no recovery of Rs. 4,45,825/- on account of excise duty. However, the adjudicating authority and subsequent appellate bodies found these certificates contrary to the evidence in the invoices. The Tribunal noted that ledger accounts filed by the appellant did not establish that excise duty was later adjusted.

5. Application of the Principle of "Unjust Enrichment":

The authorities applied the principle of "Unjust Enrichment," concluding that refunding the excise duty to the appellant would result in unjust enrichment. The invoices indicated that the appellant collected excise duty from the buyer, and thus, the amount was directed to be credited to the Consumer Welfare Fund under Section 11B of the Act. The court upheld this decision, referencing the Supreme Court's judgment in Mafatlal Industries and other relevant cases, emphasizing that the claimant must prove the incidence of duty was not passed on to another person.

Conclusion:

The High Court dismissed the appeal, affirming that the appellant failed to rebut the presumption under Section 12B and that the refund directed to the Consumer Welfare Fund was justified to prevent unjust enrichment. The question of law framed was deemed a question of fact, not warranting interference.

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