2024 (8) TMI 595 - AT - Central Excise

CESTAT rejects refund claim due to lack of proof that duty burden wasn't passed to contractor

M/s. Raman Sinhas Electricals Versus Commissioner of GST & Central Excise, Chennai

CESTAT Chennai rejected appellant's refund claim for duty paid under protest. Appellant claimed duty was passed to principal contractor who later withheld ... Principles of unjust enrichment - Refund of duty earlier paid under protest - rejection refund claims on the ground that they were not eligible for refund as the same was hit by the bar of unjust enrichment and vacated the payment of duty paid under protest and credited it to Consumer Welfare Fund u/s 12C of the Central Excise Act, 1944 - eligibility for the duty exemption under N/N. 108/1995 dated 28.08.1995 - HELD THAT:- In the instant case the appellant agrees that the duty paid by mistake to government had been passed on to the principal contractor under protest. Its their argument that the principal contractor has later withheld payment which exceeds the amount claimed as refund in order to adjust the excise duty already paid to the appellant. No factual proof of the same has been given or placed before the proper officer nor has it been shown that the duty paid by the principal contractor for whom the amount is an expense in turn have not passed it on to someone else or have not taken credit of the same and set it of against duties to be paid. This could have been done by way of a Chartered Accountant certificate as is in vogue in the case of certain refunds under a well-defined procedure. In the instant case the appellant agrees that the duty paid by mistake to government had been passed on to the principal contractor under protest. Its their argument that the principal contractor has later withheld payment which exceeds the amount claimed as refund in order to adjust the excise duty already paid to the appellant. No factual proof of the same has been given or placed before the proper officer nor has it been shown that the duty paid by the principal contractor for whom the amount is an expense in turn have not passed it on to someone else or have not taken credit of the same and set it of against duties to be paid. The impugned order categorically mentions that the unjust enrichment hurdle has not been crossed. No request has been filed to present these factual details before the Bench and discharge their onus, even at this distant date. The appellant has hence failed to discharge the burden cast upon them. The impugned order is upheld. The appeal stands rejected and is disposed of. Issues Involved:1. Eligibility for duty exemption under Notification No. 108/1995.2. Refund claims under Section 11B of the Central Excise Act, 1944.3. Application of the doctrine of unjust enrichment under Section 12B of the Central Excise Act, 1944.Issue-wise Detailed Analysis:1. Eligibility for Duty Exemption under Notification No. 108/1995:The appellant manufactured railway carriage fans for the Mumbai Railway Vikas project (MRVC project) funded by the World Bank. According to Notification No. 108/1995, such goods could be cleared without payment of duty. The appellant initially paid excise duty under protest and later sought a refund, asserting that the duty was not required as per the notification.2. Refund Claims under Section 11B of the Central Excise Act, 1944:The appellant filed three refund claims totaling Rs. 30,34,895/- under Section 11B of the Central Excise Act, 1944. The original authority rejected these claims, stating they were barred by unjust enrichment and credited the amount to the Consumer Welfare Fund under Section 12C of the Central Excise Act, 1944. The Commissioner (Appeals) upheld this decision, leading to the present appeal.3. Application of the Doctrine of Unjust Enrichment under Section 12B of the Central Excise Act, 1944:The doctrine of unjust enrichment, as per Section 12B, presumes that the incidence of duty has been passed on to the buyer unless proven otherwise. The appellant argued that the principal contractor, M/s. Siemens (India) Ltd, had withheld payments exceeding the refund amount to adjust the excise duty already paid. However, no documentary proof was provided to substantiate that the duty burden was not passed on to subsequent customers.The tribunal referred to the landmark judgment in Mafatlal Industries Ltd vs. Union of India, which elaborates on the doctrine of unjust enrichment. The judgment emphasized that only those who bear the ultimate burden of the duty are entitled to a refund. The appellant failed to provide sufficient evidence, such as a Chartered Accountant's certificate, to prove that the duty was not passed on.The tribunal found that the appellant did not discharge the burden of proof required to rebut the presumption of unjust enrichment. The Commissioner (Appeals) correctly noted that the appellant did not meet the standard of proof necessary to establish their claim.Conclusion:The tribunal upheld the impugned order, rejecting the appeal on the grounds that the appellant failed to provide adequate proof to overcome the presumption of unjust enrichment. The refund claims were rightfully credited to the Consumer Welfare Fund, and the appeal was disposed of accordingly.Order Pronounced:The order was pronounced in open court on 09.08.2024.