TaxTMI 
TaxTMI 
2018 (1) TMI 1169
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.... Act, 1944?" 3. Supporting the above, Mr.A.P.Srinivas, learned counsel for the appellant, submitted that during the material time the final products were exempted from payment of duty and therefore, the intermediate goods were exposed to duty liability, vide proviso to Notification No.67/95 CE dated 01.03.1995, as amended. As the intermediate goods were captively consumed, in the manufacture of the exempted final products, the assessee requested for provisional assessment. On finalisation of the provisional assessment, some amounts became due to be refunded. The original adjudicating authority allowed refund, but credited to the fund, on the ground that incidence of duty was passed on to the buyers. CESTAT, Madras has not taken cognizance of the fact, that doctrine of unjust enrichment, would apply even to cases of captive Consumption. Placing reliance on the decision of the Hon'ble Supreme Court, in of Solar Pesticides Pvt Ltd reported in 2000 (116)ELT 401 SC, he submitted that even in the case of refund of duty paid, on the imported raw materials, which were consumed, in the manufacture of final products, such duty claimed as refund, could be passed on to the buyers indire....
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....th claim for refund whereas Rule 98 deals with making of refund, in which case the, assessee has not to comply with Section 118. Therefore, Section. 118 and Rule 98 operate in different spheres and, consequently, in Para 104 of the said judgment, it has been held that in cases where duty is paid under Rule 98 and refund arises on adjustment under Rule 98(5), then such refund will not be governed by Section 118. In the said para, it has been clarified that if an independent refund claim is made after adjustment on final assessment under Rule 98(5), agitating the same issues, then such claim would attract Section 118. This is because when the assessee makes an independent refund claim after final orders under Rule 98(5), such application represents a claim for refund and, it would not come in the category of making of refund and therefore, the bar of unjust enrichment would apply. Hence, there is no merit in the contention of the respondent tn/s. APIL that although in this case duty was paid under protest, there was no difference between such payment and duty paid under provisional assessment under the said Act. This argument was obviously advanced because unless the two payments are....
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....is only that person who can ultimately claim its refund. But whether such person does not come forward or where it is not possible to refund the amount to him for one or the other reasons, it is just and appropriate that that amount is retained by the State, that is, by the people. There is no immorality or impropriety involved in such, proposition. Where such a claim is made, it would be wholly permissible for the Court to call upon the assessee to establish that he has not passed on the burden of duty to a third party and to deny the relief of refund if he is not able to establish the same, as has been done by this Court in I.T.C. In this connection, it is necessary to remember that whether the burden of the duty has been passed on to a third party is a matter within exclusive knowledge of the manufacturer. He has the relevant evidence - best evidence - in his possession. Nobody else can be reasonably called upon to prove that fact. Since the manufacturer is claiming refund and also because the fact of passing on the burden of duty is within his special and exclusive knowledge, it is for him to allege and establish that he has not passed on the duty to a third party. Thi....
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.... were prepared by them. 10. Learned counsel for the appellant submitted that it is difficult to assume, that composite price calculated and recorded by them, in the invoices, did not Include the duty element. Similarly, keeping the price stable, even after payment of duty, would not lead to an irresistible conclusion that incidence of duty was not passed on to the customers. This, they might have done, by forgoing a part of their profit, in order to face the competitive atmosphere, in the market, for sale of their goods. Therefore, the decision of the Tribunal that the bar of unjust enrichment is not applicable, in cases where there is no change, in the price of final product, and no increase in the rate of duty, is not correct. 11. Learned counsel for the appellant submitted that the Tribunal in Commissioner of Central Excise, Goa v. Christine Hoden (I) Pt. Ltd. - 2003 (155) E.L.T. 271 (Tri. - Bom.) observed that keeping the price stable is not a ground, to hold that the manufacturer, had not passed on incidence of duty to the buyers. Price always will include cost of manufacture and duty element and other taxes plus the reasonable profit margin. The question whether inciden....
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....ounsel for the appellant submitted that the above decision is not squarely applicable to the facts of the present case. For the reasons stated supra, learned counsel for the appellant prayed for reversal of the order impugned. 15. Heard Mr.A.P.Srinivas, learned counsel for the appellant and perused the materials available on record. 16. Perusal of the order made in Appeal No.202 of 2005, dated 24.04.2015, on the file of the Commissioner of Central Excise (Appeals), Coimbatore and in the appeal filed by M/s.Aquasub Engineering, Coimbatore against the order-in-original No.93 of 2005 dated 23.06.2005 (C.No.IV/10/23/2005-RF), on the file of the Assistant Commissioner of Central Excise, Coimbatore, I Division, shows that, after considering the facts of the case, evidence and rival submissions, Commissioner of Central Excise (Appeals), Coimbatore, ordered in appeal No.202 of 2005 at Paragraph Nos.5 to10, ordered as follows: "5. I have gone through the facts of the case, grounds of appeal and the submissions made at the time of personal hearing. The issue arising for consideration is whether the refund claim in the facts and circumstance of the case is barred by unjust enri....
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....passed on to the buyer. Since the expression 'incidence of duty' means the burden of duty, it includes even the duty passed indirectly in terms of Apex Court's decision in the case of Solar Pesticide Pvt. Ltd referred herein. Hence the question more preciously is whether or not the burden of duty has indirectly been passed on to the buyer since the final product does not suffer duty because of exemption and since it is essentially a case of captive consumption of duty paid goods. 6. Under normal circumstance, a manufacturer would have occasion to indicate the duty amount in the invoice when the goods are cleared and this would form the basis to ascertain whether the duty amount under claim for refund was passed on to the customer or not. Since the clearance of stampings in the instant case is for captive consumption, the said occasion does not arise. In such case, one more occasion thrown upto the manufacturer is to indicate the duty amount in the invoice when the final product using the said input is cleared and this would help to ascertain whether the duty amount under claim was indirectly passed on to the customer in terms of the above said case law. But thi....
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....evy of the excise duty - which is uniformly levied on all manufacturers of similar goods - but for other reasons. No manufacturer can say with any reasonableness that he cannot survive in business unless he collects the duty from both ends. The requirements complained of (prescribed by Section11B) is thus beyond reproach - and so are Sections 12A and 12B. All that Section 12A requires is that every person who is liable to pay duty of excise on any goods, shall, at the time of clearance of the goods, prominently indicate in all the relevant documents the amount of such duty which will form part of the price at which the goods are to be sold, while Section 12B raises a presumption of law that until the contrary is proved, every person who has paid the duty of excise on any goods shall be deemed to have passed on the full incidence of such duty to the buyer of such goods. Since the presumption created by Section 12B is a rebuttable presumption 0f law and not a conclusive presumption - there is no basis for impugning its validity on the ground of procedural unreasonableness or otherwise. This presumption is consistent with the general pattern of commercial life. It indeed gives effect ....
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....re appealed against - or questioned in a writ petition or suit, as the case may be, assuming that such a writ or suit is entertained and is allowed/decreed - then any refund claim arising as a consequence of the decision in such appeal or such other proceedings, as the case may be, would be governed by Section 11B. It is also made clear that if an independent refund claim is filed after the final decision under Rule 9B(5) reagitating the issues already decided under Rule 9Bs - assuming that such a refund claim lies - and is allowed, it would obviously be governed by Section 11B. It follows logically that position would be the same in the converse situation." 11. At the outset it may be pointed out that in Para 104 there is nothing to suggest that payment of duty under protest does not attract bar of unjust enrichment. Para 104 only states that if refund arises upon finalisation of provisional assessment, Section 11B will not apply. 12. In the present case, reliance was placed by the respondent M/s.APIL on the above para in support of its contention that payment of duty under protest and payment of duty under provisional assessment are both "on account" payments un....
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....the present refund case because of the subsequent amendment to Rule 9B(5), the fact remains that it makes a distinction between claiming of refund and making of refund and the possibility of both arising as a consequence of finalisation of provisional assessment. As already discussed, the provisional assessment in this case is for want of cost elements, essential to arrive at the assessable value and it is not only recurring but also periodical. The Department in the said circumstance has equally no other option but to concede their request for provisional assessment. As a matter of fact, the assessment was finalised based on the cost sheet furnished by AD(cost) and it was acceptable to both. The appellants had not objected to and it was not a matter of dispute at all. Hence the circumstance that has led to refund claim in this case places the present issue on a different footing, notwithstanding and even subjecting to the applicability of unjust enrichment in terms of Rule 7 of Central Excise Rules, 2002. If these circumstantial variations are not fairly appreciated, the mechanism of provisional assessment, I am afraid, would become a mere ritual in the instant case. 7. T....
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....from the list price like discount/charity only varied. Particularly for the year 2001-02 there is no difference in the discount rate and the charity collected, when compared to the previous year. This would in other words mean that irrespective of the fact that the provisional price of the stampings adopted was higher than the final price, the price of pump sets was kept constant and the difference was not loaded into the price of pumps. Had it been so, the price would not have remained the same but would have climbed up. It is also one of the contentions of the appellants that as supported by the evidences placed by them, the price of pumps remaining constant throughout, the higher, incidence of duty could not have been anticipated way back in 1992 so as to include in the price of final product and hence was not passed on by them. Therefore, when there is no denying the fact that any increase in the price of stampings would have had an impact in the price of pumps, the absence of such increase in the price of the pumps would be a clear indicator that the increase in the price of the stampings was not added to the price of pumps. Against this background, it is but logical and reaso....
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....facturer paying the purchase price which included cost of purchase plus taxes and duties on the date of purchase. In such cases, cost of purchase to the buyer is a relevant factor. None of the authorities below have looked into this aspect. Even the Appellate Tribunal has not gone into this relevant factor. It has merely quoted the passages from the order of the lower authority, whose order was impugned before it. Costing of the goods in the hands of the distributor, the cost element and the treatment given to purchases by the buyer in his own account were relevant circumstances which the authorities below failed to examine. It was submitted that cost of purchase was not a relevant factor. It was submitted on behalf of the respondent that the resale price charged by the buyer was not a relevant factor. It was submitted that since the sale price of the goods before and after the assessment remained the same the burden of excess duty was absorbed by the respondent. It was submitted that in any event the sale price of the goods increased much less than the amount of duty (differential) involved in this case and, therefore, incidence of duty was not passed on to the consumers. In this ....
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....r opinion, the principle of unjust enrichment incorporated in Section 27 of the (Customs) Act would be applicable in respect of imported raw material and captively consumed in the manufacture of a final product. Whether the incidence of the duty had been passed on to the consumer was not decided by the High Court in Solar Pesticide's case (supra) because in its opinion the principle of unjust enrichment could not apply to the cases of captive consumption. In the case of Solar pesticide Pvt. Ltd., therefore, we do not go into this question whether the incidence of duty had not been passed on by the respondent". It was however made clear in para 27 of the order that the question as to whether the principle of unjust enrichment would, on facts, apply or not has to be decided in the circumstance of the case. In the above said case, the final product was cleared on payment of duty and therefore the cost of captively used items, which went into pricing of those dutiable final products, was considered to have included the duty burden also. In the present case, the final products are exempt and therefore the principle laid down in the case of Solar Pesticides cannot be applied....
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....held as follows:- "5. I have carefully considered the submission of both sides. The short issue in this case is as to whether refund sanctioned allowed in the impugned order is hit by unjust enrichment or not. There is no dispute on the fact that respondents opted for provisional assessment for the intermediate product manufactured by them and supplied to their own sister unit for manufacture of the final product Power Driven Pumps which is exempted from payment of excise duty. The period involved in both the cases is from 01.04.2000 to 31.03.2002. The Revenue has not brought any clear arguments against the impugned order but only stated that there was no clear evidence of enhancement in price and there is no evidence to show that the price remained constant. They have only stated that Chartered Accountant certificate is not acceptable whereas I find from the impugned order dated 11.11.2005 that the LAA has dealt the issue in detail and passed an elaborate order extending reasons in para 6 to 8 and came to the conclusion that price of the final product cleared by the sister unit remained constant as the goods was exempted from excise duty. Relevant para-8 of the Commission....
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.... goods and placed much reliance on the certificate of the Chartered Accountant. In a number of decisions of Hon'ble Apex Court and High Court as well as Tribunal, the Courts have consistently held that when there is no change in the price of the final product cleared and there is no increase in the rate of duty, the bar of unjust enrichment is not applicable. The Tribunal in the case of CCE Kanpur Vs Corona Cosmetics & Chemicals (P) Ltd.(supra) dealt identical issue. The relevant portion of the said decision is reproduced as under:- "7. In this case, the issue is whether the respondents have discharged burden that incidence of duty has not been passed on to the customers. The contention of the respondents is that the invoices were showing the composite price of the goods and the price of the goods remained the same during the period in question and prior to that. The Tribunal in the case of C.C.E. V. Metro Tyres (supra) on similar facts, held that the assessees' invoices during the material period showing the composite price and duty not indicated separately, itself is sufficient to show that incidence of duty has not been passed on to the customers. This view was ....