2016 (9) TMI 285 - AT - Central Excise

Tribunal overturns Commissioner's order on Central Excise refund application, emphasizing unjust enrichment doctrine

The Tribunal allowed the appeal filed by the Revenue, overturning the order of the Commissioner (Appeals) in a case concerning a refund application for ... Refund claim - goods covered under invoice were eligible for exemption under Notification No. 3/2004-CE dated 08.01.2004 - firstly refund application was filed by the buyer which was subsequently withdrawn and there after respondent had filed the refund application - Held that:- at the time of supply of goods, the respondent herein had charged the Central Excise Duty in the invoices which were paid by the buyer. This fact is evident from the refund claim filed by the buyer. Since the buyer has withdrawn the refund application and on 10.07.2007 the respondent had filed the refund application, it is evident that the Central Excise Duty amount was not returned by the respondent to the buyer till such time. There is also no evidence available in the file that the Department has insisted the buyer to withdraw the refund application. Since the incidence of duty had been passed on from the respondent to the buyer at the time of supply of goods, subsequent issuance of Cheque which is in the form of a credit note cannot be considered as a document to prove the fact that the incidence of duty has not been passed on. We find support from the judgment of Gujarat High Court cited by the Revenue, in the case of Commissioner of Central Excise and Customs vs Dutron Plastics [2015 (8) TMI 1173 - GUJARAT HIGH COURT], wherein the Hon’ble Gujarat High Court have held that the doctrine of unjust enrichment is established, even if the credit notes are issued after clearance of goods. - Therefore, we do not find any merits in the impugned order. - Decided in favour of Revenue Issues:1. Appeal against the order passed by the Commissioner (Appeals) disallowing the appeal of the Revenue regarding a refund application for Central Excise duty on CRGO Energy Efficient Transformer.Analysis:The case involved an appeal against an order passed by the Commissioner (Appeals) concerning a refund application for Central Excise duty on a supplied transformer. The respondent had initially charged Central Excise Duty on the invoice, which the buyer paid. Subsequently, the buyer filed a refund application but withdrew it. The respondent then filed a refund application, which was adjudicated in their favor. The Department appealed against this decision. The Tribunal noted that the duty amount was not returned to the buyer by the respondent, indicating that the duty incidence had been passed on. The issuance of a credit note after the supply of goods was deemed insufficient to prove that the duty incidence had not been passed on. Citing a relevant judgment, the Tribunal emphasized the doctrine of unjust enrichment, even if credit notes are issued post goods clearance. Consequently, the Tribunal found no merit in the impugned order and allowed the appeal filed by the Revenue.This judgment highlights the importance of establishing whether the duty incidence has been passed on in cases involving refund applications for Central Excise duty. It underscores the significance of timing in determining the passing of duty incidence and the relevance of supporting evidence in such matters. The reference to the doctrine of unjust enrichment serves as a legal basis for decisions related to refund claims and the passing on of duty incidence. Overall, the judgment clarifies the criteria for assessing refund applications and the implications of passing on duty incidence in such scenarios.