Appeal dismissed: Excise duty refund to consumer welfare fund upheld under Section 11B as duty burden passed to buyers

The MP HC dismissed an appeal challenging refund of excise duty to consumer welfare fund instead of the appellant. The appellant failed to rebut the presumption under Section 12B of Central Excise Act that duty incidence was passed to buyers. Despite appellant's claim that duty amounts were adjusted in sale consideration, authorities found the duty was recovered from customers through invoices. The CA certificate relied upon by appellant contradicted invoice evidence. Concurrent factual findings established duty collection from buyers, making direct refund to appellant unjust enrichment, warranting credit to consumer welfare fund under Section 11B.

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Issues Involved:

1. Applicability of excise duty on the sale of packing material (M.S. Drums).
2. Entitlement to a refund of excise duty paid under protest.
3. Rebuttal of the presumption under Section 12B of the Central Excise Act, 1944.
4. Credibility of certificates issued by the Chartered Accountant and buyer.
5. Application of the principle of "Unjust Enrichment".

Issue-wise Detailed Analysis:

1. Applicability of Excise Duty on Sale of Packing Material (M.S. Drums):

The appellant, engaged in the manufacturing of PU Foam products, contended that excise duty was not applicable on the sale of M.S. Drums as they were not purchased as input. Despite this, the Central Excise Department issued several show-cause notices demanding excise duty, which the appellant paid under protest from 20/5/2000 to 13/9/2002.

2. Entitlement to Refund of Excise Duty Paid Under Protest:

The appellant sought a refund of Rs. 4,45,825/- for the duty paid on M.S. Drums, supporting the claim with account statements and a certificate from M/s Archana Industries, asserting no excise duty was paid to the appellant. The Dy. Commissioner adjudicated in favor of the appellant but directed the amount to be credited to the Consumer Welfare Fund, a decision affirmed by the Commissioner (Appeals) and the Customs, Excise, and Service Tax Appellate Tribunal (CEGAT).

3. Rebuttal of the Presumption Under Section 12B of the Central Excise Act, 1944:

The core issue was whether the appellant successfully rebutted the presumption under Section 12B that the incidence of duty was passed on to the buyer. The adjudicating authority examined invoices showing excise duty charged to M/s Archana Industries. Despite the appellant's claim that the duty was adjusted in the sale price, the authorities concluded that the burden was not duly discharged, as the appellant initially received payments via cheques and later in cash, indicating continued receipt of duty from customers.

4. Credibility of Certificates Issued by the Chartered Accountant and Buyer:

The appellant relied on certificates from M/s Archana Industries and their Chartered Accountant, asserting no recovery of Rs. 4,45,825/- on account of excise duty. However, the adjudicating authority and subsequent appellate bodies found these certificates contrary to the evidence in the invoices. The Tribunal noted that ledger accounts filed by the appellant did not establish that excise duty was later adjusted.

5. Application of the Principle of "Unjust Enrichment":

The authorities applied the principle of "Unjust Enrichment," concluding that refunding the excise duty to the appellant would result in unjust enrichment. The invoices indicated that the appellant collected excise duty from the buyer, and thus, the amount was directed to be credited to the Consumer Welfare Fund under Section 11B of the Act. The court upheld this decision, referencing the Supreme Court's judgment in Mafatlal Industries and other relevant cases, emphasizing that the claimant must prove the incidence of duty was not passed on to another person.

Conclusion:

The High Court dismissed the appeal, affirming that the appellant failed to rebut the presumption under Section 12B and that the refund directed to the Consumer Welfare Fund was justified to prevent unjust enrichment. The question of law framed was deemed a question of fact, not warranting interference.

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