2024 (7) TMI 679 - AT - Central Excise

Refund of duty paid - central excise levy was withdrawn retrospectively vide Notification No. 23/2012 dated 08.05.2012 on articles of jewellry - appellant has not established that the duty is not passed on to another - principles of unjust enrichment - HELD THAT - The refund sanctioning authority had called for a report from the Range Officer to verify and report as to whether the incidence of duty has been passed on to the customers by the appellant. The Range Officer vide his report O.C.No. 107/2013 dated 22.02.2013 has reported that the incidence of duty has not been passed on to the customers. It is also seen stated that he has verified the documents - the appellant has mentioned 1% excise duty on the value of the goods. However, on the invoices issued from the depot to the customers, the appellant has not mentioned any excise duty. The actual sale takes place from the depot to the customer. From the factory to the depot, it is merely a stock transfer from one unit of the appellant to the other. As per the Range Officer s report as well as the invoices furnished before us, we are able to conclude that the appellant has borne the burden of duty and has not passed the incidence of duty to the customers. The appellant has not collected any amount as duty from the customer. The Ld. Counsel for the appellant has explained difference in the value of the clearances is because of the fluctuation in the price of gold. This is a case of refund of excise duty and not an issue of valuation. The only aspect to be looked into is whether the incidence of duty is passed on to another. It is found that the view taken by the Adjudicating Authority as well as the Commissioner (Appeals) that the incidence of duty has been passed on to the customer and that refund is hit by bar of unjust enrichment is erroneous and requires to be set aside. The appellant is eligible for refund. The impugned order to the extent of crediting the amount to the Consumer Welfare Fund is set aside. The amount sanctioned is to be refunded to the appellant - Appeal allowed.

Summary

Issues:
Refund of central excise duty; Principle of unjust enrichment; Burden of proof on appellant; Verification of duty passed on to customers; Interpretation of invoices; Fluctuation in gold prices affecting invoice values.

Analysis:
The case involved a dispute regarding the refund of central excise duty paid by a gold jewellery manufacturer following the retrospective withdrawal of the duty. The appellant had surrendered their Central Excise Registration and filed a refund claim, which was initially rejected on the grounds of unjust enrichment. The authorities held that the duty might have been passed on to customers. The appellant contended that they had not collected excise duty from customers and had not passed on the duty. They provided evidence such as invoices and a certificate from a Chartered Accountant to support their claim.

The Adjudicating Authority and the Commissioner (Appeals) upheld the rejection of the refund claim, citing discrepancies in invoice values and assuming that duty had been passed on to customers. The appellant argued that the differences in values were due to fluctuating gold prices and that the duty had not been collected from customers. The Range Officer's report confirmed that the duty had not been passed on to customers, but this was not considered by the Adjudicating Authority.

Upon examination of the evidence, the Tribunal found that the duty had not been passed on to customers. They noted that the invoices from the factory to the depot mentioned excise duty, but the invoices to customers did not. The Tribunal emphasized that the actual sale occurred at the depot, not the factory, and the duty had not been collected from customers. They concluded that the appellant was eligible for the refund, overturning the previous decisions.

The Tribunal set aside the order to credit the amount to the Consumer Welfare Fund and directed the refund to the appellant. The decision was based on the finding that the duty had not been passed on to customers, thus not falling under the principle of unjust enrichment.