TaxTMI 
TaxTMI 
2016 (12) TMI 393
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....ssistant Commissioner of Central Excise, Service Tax Division -I, Mumbai with the finding that the documentation furnished with the claim was not sufficient to evince that the tax had been collected by M/s M Pallonji & Co or of M/s Pallonji & Co having deposited the said amount to the credit of the Central Government. The rejection was challenged before Commissioner of Central Excise (Appeals-II), Mumbai Zone-I who, vide order-in-appeal no. M-I/AV/71/2011 dated 31^st January 2011, invoked the bar of limitation for a portion of the claim and the bar of 'unjust enrichment' for the entire amount to confirm the rejection. The order of the first appellate authority is in dispute before us. 3. Having heard Learned Counsel for appellant and Learned Authorized Representative, we examine all aspects of the appeal in detail. 4. The impugned order admits that notification no. 16/2005-ST dated 7th June 2005 does exempt construction of ports from the purview of tax and that transport terminal was, in any case, outside the ambit of the taxable service. Despite eligibility for tax exemption the for the period prior to 4^th September 2006 was held to bar....
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....on before proceeding to entitlement, computation, sanction and credit/release. 7. The impugned order has discarded a part of the claim as barred by limitation. Despite having conceded eligibility for exemption and entitlement for refund of amounts paid from 4^th September 2005, it was held that the power tariff charged from customers must have included the tax so paid. Presumably, the first appellate authority was satisfied with evidence of tax having been collected and credited to the account of the Central Government. Else, there was no cause to in-to a finding on 'unjust enrichment' which need be invoked only at the stage of sanction. Having invoked the bar of 'unjust enrichment', the only course of action available to the appellate authority was to reverse the order of the lower authority by sanctioning and crediting Rs. 1,08,95,273 to the Fund and rejecting the claim for Rs. 1,44,69,743 as time-barred. 8. We now examine whether the first appellate authority was correct in concluding that the principle of 'unjust enrichment' can be invoked to the detriment of the appellant and for rejecting the claim. The sole ground for doing so appears to....
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....ction of crediting to the Fund. 9. The decisions relied upon in the impugned order do not lead to the outcome recorded by the first appellate authority. It is, thus, that we are compelled to place the cited decisions in the appropriate perspective. Reliance has been placed on Union of India v. Solar Pesticides & others [2002-TIOL-57-SC-CX] which held that unjust enrichment applies to captive consumption, on SRF Ltd v. Commissioner of Customs Chennai [2005-TIOL-1674-CESTAT-Del-LB] holding that the imported goods consumed captively are not exempt from the aegis of unjust enrichment and on Western Coalfields v. Commissioner of Central Excise, Kolkata [2011-TIOL-126-CESTAT-Del] which has held that refund of duty paid in error on capital goods, even if not used for manufacture of excisable goods, is subject to the test of 'unjust enrichment' - with the last, the appellate Commissioner would like to convince that the ratio applies to the appellant whose output service is not taxable. 10. In re Solar Pesticides Pvt Ltd, the Hon'ble Supreme Court was concerned with imported goods on which duty had been erroneously paid that the Hon'ble High Court of Bombay....
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....nch explained that pricing is the outcome of a number of factors other than increase in duty liability and the claim of having borne the burden solely by reference to price is not adequate. This too points out the trend of judicial thinking that there is need for claimant of refund to produce some substantive evidence that would satisfy the competent authority about incidence having been borne by the claimant. 11. The ratio that we can deduce from these decisions is that every refund claim must necessarily pass the test of 'unjust enrichment' after determining eligibility and entitlement to refund and, unless covered by the situations enumerated in the first proviso to section 11B (2) of Central Excise Act, 1944, must be transferred to the Fund. Further, the evidence produced must be considered in the context of the business activity of the claimant for satisfaction that duty/taxes have been borne only by the claimant. Consequently, we hold that if the bar of 'unjust enrichment' has been invoked then the eligibility for the claim has been accepted by the authority - original or appellate - because only eligible amounts can be credited to the Fund. It ....
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.... charged from customers would have included the tax component. Apparently, the functioning of the electrical energy sector has not been taken into consideration. With the coming into force of the Electricity Act, 2003, the monolithic utility styled as State Electricity Boards were 'unbundled' as producers (generating companies), channels (transmission companies) and outlets (distribution companies). Power producers are classified as 'independent' and 'captive.' Well before the legislated 'unbundling', independent power producers did exist but they entered into contractual arrangements with State Electricity Boards for sale of energy. The new Act also established a regulatory scheme with intent to ensure consumer interests and to abolish the prevailing system of 'cross-subsidy' and cost of inefficiency' being borne by the consumer. A mechanism for fixation of power tariff on 'cost-plus' basis with detailed annual reporting accompanied by elaborate computations and public hearings preceding the fixation of tariff by an independent Electricity Regulatory Commission was put in place. Each item of cost is subject to scrutin....
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....tablish that price paid to the contractor did include the tax component and that it did not suffice to establish that tax was deposited to the credit of the government by the latter. Taking the last issue first, there is no requirement for the service recipient to establish that the amount was credited to the government. Under the scheme of the Finance Act, the relationship between service-provider and service-recipient does not encompass the government. At the same time the recipient is brought in contact with government by eligibility to claim refund if paid in excess. The scheme of section 11B of Central Excise Act, 1944 does not specify that duty has to be credited to the Central Government as a pre-requisite for eligibility. It merely requires that duty be paid and, as far as recipient of service is concerned, that obligation is discharged by making over the amount in the invoice that separately identifies the tax component. The claimant is not required to enforce tax-payment; that is the responsibility of tax officials who are vested with power to recover such tax which has been collected in excess. With that specific empowerment available in the statute, the need to pr....