1998 (6) TMI 250 - AT - Central Excise

Refund ordered as unjust enrichment not proved; contract wording limited to leviable duties u/s 12C Central Excise Act

CEGAT allowed the appeal, holding that the doctrine of unjust enrichment was not attracted and that refund could not be credited to the Consumer Welfare ... Refund - Unjust enrichment - Credit to National Consumer Welfare Fund established under Section 12C of Central Excise Act, 1944 - contract terms regarding excise duty inclusion - conflict in what is stated in different parts of the schedule of rates - HELD THAT:- There is an apparent conflict in what is stated in different parts of the schedule of rates. Thus, as against a note that the rates are inclusive of all duties, taxes and to and fro handling charges in one place there is another remark regarding the rates under the caption condition of contract which is more elaborate than the earlier referred to sentence. The expression “Rates are inclusive of all duties and taxes” have to be understood as applicable to only duties or taxes which are payable. In the present matter there is no case of the department that excisable goods have come into existence at the hands of the appellant and that such duties were leviable and therefore, they should have been taken to have been provided for when the lump sum price was quoted. We hold that the Assistant Collector erred in coming to the conclusion with reference to the condition in the schedule of rates that the rates are inclusive of all duties and taxes, that the rates mentioned therein conclusively included the element of excise duty and therefore, the appellant should be held to have passed on the duty burden to their customer. It is the case of the appellant all along that goods are not chargeable to excise duty and that when a stand was raised by the Assistant Collector while granting the permission under Rule 173-H that duty was leviable, appellant had taken up the matter with the Collector (Appeals) questioning such a direction and had succeeded before that authority. The subject duty had been paid under protest during the intervening period before receipt of the favourable order of the Collector (Appeals). When it was the case of the appellant that no excise duty is leviable and appellant has been carrying on that dispute with the department, it cannot be taken that the price quoted in the contract was inclusive of such an element of excise duty. We also enquired from the learned Counsel whether their application before the authorities for availment of the procedure under Rule 173-H was on their own initiative or whether they had been advised by the customer to avail of the same, but he had no reply to give. Notwithstanding this lack of information which would have clinched the matter, we feel that in the circumstances of the case, the correspondence exchanged by the appellant with the department all along in support of their case for availment of Rule 173H and other attendant facts, as has been noticed on perusal of the records and the impugned order, the appellant has made out a case that the duty burden in question had not been shifted by them to their customer. In the circumstances, we set aside the finding directing the credit of the amount of refund to the Consumer Welfare Fund. Accordingly, we hold that the appellant would be entitled to obtain refund in cash or credit to their Personal Ledger Account. Issues involved: Appeal against the order directing credit to National Consumer Welfare Fund, unjust enrichment, interpretation of contract terms regarding excise duty inclusion.Unjust Enrichment Issue: The appellant entered into a contract with M/s. Indian Oil Corporation for fabrication work and claimed refund after clearing tank wagons on payment of duty under protest. The Assistant Collector rejected the refund claim citing unjust enrichment. The appellant contended that they did not pass on the duty burden to the customer and argued based on contract terms. The Assistant Collector and Collector (Appeals) held that the duty burden was passed on, supported by the customer's certificate. The appellant argued against this, stating they paid duty during the interim period and did not include duty in the contract price.Interpretation of Contract Terms Issue: The contract rates were inclusive of various charges, but there was no explicit mention of excise duty. The authorities concluded that excise duty was included based on the contract terms. However, the Tribunal disagreed, stating that the absence of specific mention of excise duty does not imply its inclusion. The Tribunal emphasized that the price was a lump sum amount and the mention of inclusive of all duties and taxes was to avoid future demands, not necessarily for excise duty. The Tribunal also highlighted the lack of evidence regarding the breakdown of the lump sum amount to determine if excise duty was factored in.Judgment: The Tribunal found that the Assistant Collector erred in concluding that the rates included excise duty, as the appellant had consistently argued against the dutiability of the goods. The Tribunal noted that the appellant had disputed duty liability with the department and had paid duty under protest. The Tribunal also considered the lack of information regarding customer advice on availing Rule 173H, indicating that the duty burden was not transferred to the customer. Therefore, the Tribunal set aside the order directing credit to the Consumer Welfare Fund and held that the appellant was entitled to a refund in cash or credit to their Personal Ledger Account.