Court grants refund claims based on unjust enrichment, finding established discount invoicing practice and dealer confirmation.

TATA MOTORS LTD Versus COMMISSIONER OF CENTRAL EXCISE

TATA MOTORS LTD Versus COMMISSIONER OF CENTRAL EXCISE - 2014 (307) E.L.T. 761 (Tri. - Mumbai) Issues:
Refund claims rejected on grounds of unjust enrichment.

Analysis:
The appellant filed refund claims due to discounts given to customers on vehicle sales. The discounts were known to customers before clearance. Invoices were issued for the gross value, followed by credit notes for discounts. The duty component in discounts led to the refund claims. Authorities transferred the claims to the Consumer Welfare Fund citing unjust enrichment. The appellant argued that customers knew about discounts in advance, credit notes proved passing of unjust enrichment, and buyers confirmed receiving discounts. They cited relevant case laws to support their claim.

The opposing view highlighted duty payment at vehicle clearance, invoking unjust enrichment. Precedents like Sangam Processors (Bhilwara) Ltd. and Grasim Industries Ltd. set the principle. Mere issuance of credit notes post-duty collection does not discharge unjust enrichment burden. Dealers selling vehicles to end-users raised doubts on duty pass-on. The appellant's entitlement to refund claims was questioned based on these grounds.

The judgment acknowledged that customers were aware of discounts pre-clearance. Invoicing on pre-discounted value with subsequent credit notes was the practice. The High Court's decision in Addison & Co. supported the appellant's argument on unjust enrichment. The appellant's balance sheet reflected duty refund as receivable, with dealer confirmation of discount receipt. Considering these factors, the court ruled in favor of the appellant, allowing the refund claims and setting aside the previous orders.