2005 (6) TMI 498 - AT - Central Excise

Tribunal Upholds Duty Passing to Buyers, Rejects Refund Claim

The Tribunal rejected the appeal, emphasizing the duty passing on to buyers and the inadmissibility of the refund claim. The doctrine of unjust enrichment ... Refund - Unjust enrichment Issues:Classification of products under Central Excise Tariff, refund claim, applicability of Section 11B, unjust enrichment, duty incidence passed on to buyers.Classification of Products under Central Excise Tariff:The dispute arose in 1979 regarding the classification of Vajradanti and Turmeric Paste products under the Central Excise Tariff. After various legal battles, the High Court finally classified them as Ayurvedic Medicines in 1988. A compromise agreement before the Supreme Court in 1993 confirmed this classification under Tariff Item 68 and exemption from duty under Notification No. 234/82-C.E.Refund Claim and Section 11B Applicability:The appellants filed a refund claim for Rs. 3,40,40,810.05 in 1993, but the Assistant Commissioner issued a show cause notice questioning the claim's nature. The appellants argued that the amounts paid were security deposits, not duty, and hence Section 11B did not apply. However, authorities held that the duty incidence was passed on to buyers, necessitating crediting the amount to the Consumer Welfare Fund.Unjust Enrichment and Passing on Duty Incidence:Authorities found that the appellants collected more from customers than declared in price lists, indicating the duty element was passed on. The Commissioner rejected the appeal, emphasizing the Supreme Court's compromise agreement and the duty incidence passing on to buyers. The Tribunal also agreed that the burden of duty had been passed on, justifying the amount's credit to the Consumer Welfare Fund.Buyers' Affidavits and Duty Passing On:The appellants argued that buyers' affidavits denied passing on excise duty, but authorities noted that incorporating duty in product costs implied passing on the burden. The Tribunal upheld this view, citing the Supreme Court's observations on duty passing on and dismissing the appellants' contradictory claims.Conclusion:The Tribunal rejected the appeal, emphasizing the duty passing on to buyers and the inadmissibility of the refund claim. The doctrine of unjust enrichment was highlighted, underscoring that no person can collect duty from both ends. The judgment affirmed the authorities' decision to credit the amount to the Consumer Welfare Fund, considering the duty incidence passed on to buyers.