2017 (8) TMI 160 - AT - Central Excise

Tribunal Upholds Decision on Refund Claims, Emphasizes Unjust Enrichment and Compliance

Carrier Air-Conditioning & Refrigeration Ltd Versus CCE, Delhi-III

The Tribunal upheld the Commissioner (Appeals)' decision to disallow refund claims totaling Rs. 7,01,241/- and Rs. 6,11,387/- due to unjust enrichment. ... Refund Claim - unjust enrichment - Rule 7 of Valuation Rules - whether the appellant have realized excess duty which they have kept with themselves without passing it further to the consumers? - Held that: - the excise duty element has nowhere been separately mentioned in the sale invoices being issued from the depot. Hence, it cannot be ascertained whether the duty element was not borne by the ultimate buyers. Since the ultimate buyers have paid the entire amount mentioned in the invoices, it is evident that the entire duty element has been borne by the ultkmate buyers. As the entire amount has been recovered from the ultimate buyers including the duty element, unjust enrichment is attracted. It is not the case of the appellant that excise duty does not for part of the value of clearances from depot. In the present case, there is no provisional assessment but final duty payment. Appeal dismissed - decided against appellant. Issues:Refund claims of Rs. 7,01,241/- and Rs. 6,11,387/-; Unjust enrichment; Compliance with Rule 7 of Central Excise Valuation Rules, 2000; Examination of evidence; Verification by Range Officer; Doctrine of unjust enrichment; Recovery of duty from buyers; Excise duty element in sale invoices; Cum duty invoices; Provisional assessment.Analysis:The case involves two appeals concerning refund claims of significant amounts. The appellant, engaged in manufacturing air conditioners and chillers, transfers goods to various locations before selling them to dealers. The refund claims were initially sanctioned but later appealed by the department. The Tribunal directed a re-examination of evidence to determine unjust enrichment, leading to the Commissioner (Appeals) allowing the department's appeals. The appellant contested this decision, arguing compliance with Rule 7 and absence of unjust enrichment. The appellant relied on case laws to support their position.The Commissioner (Appeals) was tasked with assessing unjust enrichment and compliance with Rule 7. The Tribunal found that the Commissioner properly considered these aspects and the appellant failed to prove the excess duty paid was not recovered from buyers. Lack of Range Officer verification and reliance on Chartered Accountant certificates were noted. The Commissioner's findings emphasized the need to show duty not passed on to buyers to avoid unjust enrichment. The absence of separate mention of excise duty in sale invoices raised doubts on duty recovery from buyers, leading to unjust enrichment implications.The judgment highlighted the importance of establishing duty not borne by buyers to avoid unjust enrichment. The appellant's arguments regarding the duty element in sale invoices were deemed insufficient to disprove duty recovery by buyers. Case laws cited were distinguished based on provisional assessment distinctions. The final decision dismissed the appeals, emphasizing the appellant's failure to rebut the presumption of duty passing to buyers and the lack of merit in their arguments.In conclusion, the judgment addressed issues of unjust enrichment, compliance with Rule 7, and duty recovery from buyers. The decision underscored the necessity of proving duty not passed on to buyers to avoid unjust enrichment, ultimately leading to the dismissal of the appeals based on the appellant's failure to meet this burden of proof.