2017 (4) TMI 430 - AT - Central Excise

Tribunal remands case for further examination on unjust enrichment burden of proof

M/s. Gowri Hosiery Mills Versus CCE, Coimbatore

The tribunal remanded the case to the adjudicating authority for further examination and readjudication. The appellant was granted an opportunity to ... Valuation - hosiery goods - unjust enrichment - Revenue alleged that excise duty element having been disclosed in the invoices issued by the appellant such duty element was realized by it and was unjustly enriched at the cost of the exchequer - Held that: - Appellant has clearly depicted respective invoices through which the goods were sent to consignment agent and the corresponding bills issued by the consignment agent disclosing the price in respect of sale of those goods. Appellant demonstrated that in no case the price quoted in invoice has exceeded the MRP charged by the consignment agent - Appellant is entitled to reasonable opportunity of hearing to demonstrate to the authority as to its claim that it was not been unjustly enriched - appeal allowed by way of remand. Issues:1. Levy of excise duty on hosiery goods based on MRP.2. Allegation of unjust enrichment against the appellant.3. Transfer of refund amount to Consumer Welfare Fund.4. Defense against unjust enrichment by the appellant.5. Burden of proof on the appellant regarding unjust enrichment.6. Examination of evidence and invoices by the adjudicating authority.7. Opportunity for the appellant to demonstrate lack of unjust enrichment.Detailed Analysis:1. The appellant raised a grievance regarding the levy of excise duty on hosiery goods based on the Maximum Retail Price (MRP) for a short duration. The appellant made clearances to a consignment agent under Section 4A of the Central Excise Act, 1944, disclosing the duty amount payable without charging any duty to the consignment agent. The consignment agent was not authorized to collect central excise duty, and the duty element was not realized by the consignment agent or the appellant since goods were cleared based on MRP.2. The Revenue alleged unjust enrichment, claiming that the duty element disclosed in the invoices was realized by the appellant, unjustly benefiting at the exchequer's expense. However, the appellant refuted this allegation, stating that the consignment agent only sold goods within the MRP declared on the package, and the duty disclosed in the invoices was not realized by either the consignment agent or the appellant.3. The adjudicating authority granted a refund but erroneously transferred the amount to the Consumer Welfare Fund. The Commissioner (Appeals) upheld this decision, leading the appellant to appeal against this decision, contending a misconception of fact and law.4. To defend against the allegation of unjust enrichment, the appellant presented evidence of MRP clearances made during the relevant period, demonstrating that the price quoted in the invoices did not exceed the MRP charged by the consignment agent. The appellant's claim was supported by detailed tabulations and invoices, which were scrutinized by the adjudicating authority.5. The Revenue argued that the burden of proof regarding unjust enrichment lay with the appellant. The Revenue contended that by disclosing central excise duty on the invoices, the law presumes unjust enrichment unless proven otherwise. The appellant was required to establish that it was not unjustly enriched, and the evidence presented needed further examination by the adjudicating authority.6. After hearing both sides, the tribunal noted that the appellant provided invoices showing that prices did not exceed the MRP. The adjudicating authority was directed to examine the evidence presented by the appellant to determine if any duty was separately realized by the consignment agent from the retailer and whether there was any flow back to the appellant.7. The appellant was granted a reasonable opportunity to demonstrate to the authority that it was not unjustly enriched. The tribunal remanded the appeal to the adjudicating authority for further examination and readjudication of the matter by a specified date.