2017 (8) TMI 785 - AT - Central Excise

Tribunal Orders Refund with Interest, Rejects Duty Burden Shift.

Birla Corporation Ltd. Versus Commissioner of Central Excise, Lucknow

The Tribunal allowed the appeal, directing the Adjudicating Authority to grant the refund with interest within 60 days. The decision was based on the ... Unjust enrichment - refund claim - Section 4A of the Central Excise Act - whether the doctrine of unjust enrichment is attracted where the appellants have cleared the goods on MRP based assessment, as required under Section 4A of the Central Excise Act? - Held that: - this Tribunal in the case of Amadalavalasa Cooperative Sugars Ltd [2007 (1) TMI 432 - CESTAT, BANGALORE] and in the case of Girish Foods & Beverages [2007 (2) TMI 28 - CESTAT, MUMBAI] have held that where clearances were based on MRP or fixed-price it have been held that the duty differential burden was not passed on and accordingly, unjust enrichment is not attracted. It is an admitted fact that the appellant have received the same price/MRP for clearances of goods on 06 December, 07 December, 08 December, and so on. Accordingly there can be no presumption that the appellant have passed on the excess duty deposited erroneously on 07 December, to the buyer of the goods - the doctrine of unjust enrichment has been satisfied by the appellant assessee and appellant are entitled to refund of the amount in question. Appeal allowed - decided in favor of appellant. Issues:Whether the doctrine of unjust enrichment is attracted in a case where goods were cleared on MRP based assessment under Section 4A of the Central Excise Act.Analysis:The appellant assessee, engaged in the manufacture of Portland Cement, cleared goods at a higher duty rate on 07 December, 2008, despite a subsequent reduction in the duty rate effective from the same date. The appellant sought a refund of the excess duty paid, which was allowed by the Deputy Commissioner but challenged by the Revenue on the grounds of unjust enrichment. The Revenue contended that the higher duty rate had been passed on to the buyers, while the appellant argued that the duty was paid based on MRP and not passed on to customers.The learned Commissioner (Appeals) referred to Section 11B of the Central Excise Act and relevant case law, emphasizing the burden on the claimant to prove that duty has not been passed on to third parties for a refund to be admissible. The Commissioner held that the appellant failed to meet this burden, thus denying the refund claim.The appellant appealed to the Tribunal, asserting that the duty was not passed on to customers due to the fixed MRP on each cement bag. They cited precedents where duty differentials were not considered passed on when clearances were based on MRP or fixed prices. The Tribunal considered these precedents and held that unjust enrichment was not applicable in this case, as the duty burden was not transferred to customers.The Tribunal further emphasized that the appellant consistently received the same price for goods despite duty rate changes, indicating that the excess duty was not passed on. Therefore, the Tribunal allowed the appeals, directing the Adjudicating Authority to grant the refund with interest within 60 days.In conclusion, the Tribunal's decision hinged on the absence of evidence showing that the duty burden was shifted to customers, thereby satisfying the doctrine of unjust enrichment and entitling the appellant to the refund.