2019 (7) TMI 1478 - AT - Central Excise

Tribunal allows appeal, directs refund for duty incidence absorbed by appellant, rejecting unjust enrichment claim.

The Tribunal allowed the appeal, setting aside the Commissioner's decision to reject the refund claim on the ground of unjust enrichment. It found that ... Refund of CENVAT Credit - unjust enrichment - case of appellant is that appellant reversed CENVAT credit of the above amount in September 1995 on protest at the instance of Excise Authorities and subsequently filed refund claim which went up to the CESTAT stage - HELD THAT:- It is a strange case where a refund claim of the appellant made in 1995 could not be settled till date under one pretext or the other. The entire case record does not bring out a case of unjust enrichment as refund was claimed against reversal of CENVAT credit which was ultimately held to be admissible by the CESTAT itself and that remained unchallenged so far. It is not understood when no duty was paid and only credits availed were refunded, how come a case of unjust enrichment could come into play when the said amount has been shown as receivable under the head “Loan & Advances” receivable from the respondent-department for a continuous period of 10 financial year and when the said amount is adjusted against ‘Profit & Loss Account’ under the heading “Administrative, Selling and General Expenses”. In the instant case appellant had justified absorbing of the said cost in its administrative expenses overhead and therefore, it can be safely concluded that incidence of duty has not been passed on by the appellant to any other person. Hence the order. Appeal allowed - refund allowed - decided in favor of appellant. Issues:Dismissal of appeal against rejection of refund claim on the ground of unjust enrichment and crediting the amount to Consumer Welfare Fund.Analysis:1. The appellant's refund claim was rejected by the Deputy Commissioner, leading to an appeal before the Commissioner of Central Excise & Customs, which was dismissed. The appellant had reversed CENVAT credit in 1995 and subsequently filed a refund claim. The CESTAT held the refund claim admissible and remanded the matter to examine unjust enrichment. The adjudicating authority found that duty incidence was passed on by the appellant, leading to the Commissioner (Appeals) confirming the decision and the subsequent appeal.2. During the appeal, the appellant argued that the expenses were not necessarily part of the manufacturing cost, as they were booked as administrative expenses. The appellant contended that the cost of goods was absorbed as office expenditure and no duty incidence was passed on to customers. The appellant cited relevant case laws to support their position.3. The respondent-department argued that the appellant failed to establish non-collection of duty from buyers, as corroborated by a Chartered Accountant certificate. The department relied on case laws to support their stance.4. The Tribunal noted that the refund claim had been pending since 1995 and observed no case of unjust enrichment. The appellant had shown the amount as receivable for 10 years and adjusted it against administrative expenses. The Tribunal highlighted that the pricing of a product is not static over years and various mechanisms exist to absorb costs, indicating that duty incidence was not passed on. The Tribunal allowed the appeal, setting aside the Commissioner's order and directing the department to refund the amount with applicable interest.5. The Tribunal's decision emphasized that the appellant had justified absorbing the cost in administrative expenses, concluding that duty incidence was not passed on. The order for refund was granted, emphasizing the appellant's entitlement and directing the department to make the payment promptly.