2008 (10) TMI 193 - AT - Central Excise

Tribunal emphasizes pricing consistency in excise duty refund case, overturns Commissioner's decision

The Tribunal remanded the case to the original authority for reassessment of the refund claim, emphasizing the appellant's evidence showing consistent ... Unjust Enrichment – Refund of Excess Duty Paid - Assessee relies solely on the judgment of the Madras High Court in Dollar Co. which held that the uniform sale price before and after the change in classification, valuation etc. indicated that the excess duty paid had not been passed on. This judgment was affirmed by the Apex Court when the civil appeal filed by the revenue against the same was dismissed. In the Allied Photographies India Ltd. the Apex Court held that this factor alone was not conclusive to find that the duty burden had not been passed on. - lower authorities have not rendered any finding on the claim of the assessee that the processing charges per unit quantity remained same throughout in the material period in respect of a given variety. The matter is therefore remanded to the original authority to allow the cash refund to Jansons subject to its claim being found correct. The appeal is allowed by remand. Issues:1. Whether the bar of unjust enrichment applies to the refund claim of excess duty paid by the appellant during a specific period.2. Whether the appellant, a job worker, passed on the duty paid on processed fabrics to its customers.3. Whether the appellant provided sufficient evidence to prove that the excess duty paid was not included in the processing charges collected.Analysis:1. The appellant, a job worker, manufactured processed fabrics on a job work basis and paid duty on the goods under Section 3A of the Central Excise Act. The dispute arose when the appellant paid duty under protest due to disagreement on the Assessable Cumulative Price (ACP) fixed by the Commissioner. The appellant claimed a refund of the excess duty paid, which was credited to the Consumer Welfare Fund. The authorities contended that the appellant failed to prove that the excess duty was not passed on to customers, citing the principle of unjust enrichment based on a Supreme Court judgment. The Tribunal noted conflicting judgments and held that the appellant's case was supported by invoices showing consistent charges inclusive of duty, indicating no passing on of the excess duty to customers. The Tribunal remanded the matter to the original authority for a correct assessment of the refund claim.2. The Commissioner observed that the appellant failed to demonstrate how the job charges were determined, including factors like raw materials, labor, overheads, and duty. As the appellant paid duty monthly and simultaneously cleared goods, the burden was on the appellant to prove that the duty incidence was not passed on. The Commissioner rejected the refund claim due to lack of evidence showing that the duty element was not included in the processing charges. The Tribunal considered the appellant's argument that it did not increase charges post-duty imposition, maintaining uniformity, and relying on the Dollar Co. case to support the claim of no unjust enrichment. The Tribunal found merit in the appellant's contentions and directed a reassessment by the original authority.3. The Tribunal analyzed the appellant's submission regarding the consistency in processing charges collected before and after the duty period in question. The appellant contended that it did not pass on the duty burden to customers and had not increased charges despite duty changes. The Tribunal emphasized the importance of evidence to support the claim of non-passing of duty burden. It referred to relevant case laws and concluded that the appellant's case was plausible, indicating that the excess duty was not transferred to customers. The Tribunal remanded the matter for a thorough review by the original authority, ensuring the appellant's right to a fair hearing in the process.In conclusion, the Tribunal's decision focused on the appellant's ability to prove that the excess duty paid was not passed on to customers, considering the specific circumstances and evidence presented. The judgment highlighted the importance of consistent pricing, burden of proof, and adherence to legal principles in determining the applicability of unjust enrichment to refund claims in excise duty matters.