1995 (7) TMI 200 - AT - Central Excise

Issues Involved:
1. Whether the appellant firm passed on the burden of excise duty to their customers.
2. Whether the appellant firm is entitled to a refund of excess excise duty paid.
3. Interpretation and applicability of Section 12A and Section 12B of the Central Excises and Salt Act, 1944.
4. Applicability of the doctrine of unjust enrichment.

Issue-Wise Detailed Analysis:

1. Whether the appellant firm passed on the burden of excise duty to their customers:
The appellant firm supplied waste of man-made fibers under two contracts with prices inclusive of excise duty. The firm did not file a price list for the first contract and filed a price list for the second contract, reducing the excise duty element to arrive at an assessable value. The firm inadvertently paid a higher excise duty of Rs. 5.00 per kg instead of 50% ad valorem and claimed a refund for the excess duty paid. The Assistant Collector rejected the refund claims on the grounds that the duty incidence was passed on to the customers. The lower appellate authority upheld this decision. The appellant argued that they had not passed on the burden of the excess duty to their customers, maintaining that the contracted prices were 'cum-duty' prices and no extra charges were levied on the customers. However, the Tribunal found that there was no concrete evidence to support the appellant's claim that the burden of duty had not been passed on to the customers. The only available evidence, the sales invoices, indicated that the higher duty burden was indeed passed on to the customers.

2. Whether the appellant firm is entitled to a refund of excess excise duty paid:
The appellant firm contended that they should be entitled to a refund as they had inadvertently paid a higher excise duty. They argued that the burden of this excess duty was absorbed by them and not passed on to the customers. However, the Tribunal concluded that the appellant failed to provide sufficient evidence to rebut the presumption under Section 12B that the full incidence of duty had been passed on to the buyers. The sales invoices, which prominently indicated the amount of duty paid, were considered the best evidence of the duty burden being passed on to the customers. Therefore, the Tribunal rejected the appellant's claim for a refund.

3. Interpretation and applicability of Section 12A and Section 12B of the Central Excises and Salt Act, 1944:
Section 12A mandates that the amount of duty paid must be prominently indicated in the sales invoice and other documents. Section 12B raises a rebuttable presumption that the incidence of duty has been passed on to the buyer unless proven otherwise. The Tribunal agreed that Section 12B only raises a rebuttable presumption and that an invoice may not be the sole evidence. However, the appellant failed to provide any other evidence to support their claim that the burden of duty was not passed on to the customers. The Tribunal emphasized that the sales invoice, as per Section 12A, is critical in determining the amount of duty passed on to the customers.

4. Applicability of the doctrine of unjust enrichment:
The appellant argued that denying the refund would result in unjust enrichment of the government at their expense. They cited the Supreme Court judgment in Mahavir Kishore v. State of Madras to support their claim. However, the Tribunal found that the appellant's reliance on this judgment was misplaced as there was no clear evidence regarding the promise made to the customers about the basic price and the burden of duty. The Tribunal noted that accepting the appellant's plea based on the classification list and price list would render Section 12A nugatory and allow assessees to avoid the burden of proving the passing of duty to customers. Therefore, the Tribunal concluded that the appellant's claim for a refund was not substantiated and rejected the appeal.

Conclusion:
The Tribunal rejected the appeal filed by the appellant firm, concluding that the firm had passed on the burden of excise duty to their customers as evidenced by the sales invoices. The appellant failed to provide sufficient evidence to rebut the presumption under Section 12B of the Central Excises and Salt Act, 1944. The Tribunal also emphasized the importance of Section 12A in determining the amount of duty passed on to customers and rejected the appellant's reliance on the Supreme Court judgment in Mahavir Kishore v. State of Madras. The doctrine of unjust enrichment was not applicable in this case as the appellant did not provide clear evidence regarding the burden of duty.

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