2018 (1) TMI 1169 - HC - Central Excise

Principles of Unjust Enrichment - finalization of provisional assessment - Whether in the facts and circumstances of the case CESTAT is legally correct in holding that uniformity of price before and after the finalization of provisional assessment is sufficient to rebut the presumption that the incidence of duty has not passed on to the buyers especially when statutorily the onus is on the respondent/assessee to prove conclusively with evidences that bar of unjust enrichment would not act against his as envisaged in Section 11B of the Central Excise Act 1944? Held that - Though Mr.A.P.Srinivas learned counsel for the Commissioner of Central Excise Coimbatore once again reiterated the very same grounds before this Court going through the material on record we are not inclined to accept the same for the reason that both the Appellate Authority and the Tribunal have analyzed the evidence and arrived at a categorical finding of the fact that there was no passing of incident of duty to the customers and hence the question of unjust enrichment does not arise. Appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Whether the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) was legally correct in holding that uniformity of price before and after the finalization of provisional assessment is sufficient to rebut the presumption that the incidence of duty has not passed on to the buyers.
2. Applicability of the doctrine of unjust enrichment in cases of captive consumption of intermediate goods.
3. Compliance with Section 11B of the Central Excise Act, 1944, concerning refund claims.

Detailed Analysis:

1. Uniformity of Price as Evidence:
The appellant argued that the CESTAT erred in holding that uniformity of price before and after the finalization of provisional assessment rebuts the presumption of passing on the duty incidence to buyers. They cited the Hon'ble Supreme Court's decision in Solar Pesticides Pvt Ltd, which held that even if the duty is paid on imported raw materials consumed in manufacturing final products, the duty could be passed on indirectly to buyers. The appellant contended that the Tribunal did not consider this principle correctly and erroneously upheld the order of the Commissioner (Appeals).

2. Doctrine of Unjust Enrichment:
The appellant emphasized that the doctrine of unjust enrichment applies even in cases of captive consumption. They referred to the proviso to Sub-rule (5) of Rule 9B of the Central Excise Rules, 1944, and Rule 7 of the Central Excise Rules, 2001, which stipulate that any refund arising from provisional assessment finalization is subject to unjust enrichment. The appellant cited the Supreme Court's decisions in CCE, Chennai Vs. TVS Suzuki Ltd. and CCE, Mumbai-II Vs. Allied Photographics India Ltd., which clarified that refunds arising from provisional assessments are subject to the doctrine of unjust enrichment.

3. Compliance with Section 11B:
The appellant argued that the respondent failed to prove that the incidence of duty was not passed on to the buyers, as required by Section 11B of the Central Excise Act, 1944. They asserted that the presumption under Section 12B of the Act, which assumes that the duty incidence is passed on to buyers unless proven otherwise, was not rebutted by the respondent with strong, cogent evidence. The appellant contended that the composite price in invoices and stable prices do not conclusively prove that the duty incidence was not passed on.

Tribunal and Appellate Authority's Findings:
The CESTAT and the Commissioner (Appeals) found that the respondent had sufficiently demonstrated that the incidence of duty was not passed on to the buyers. They noted that the final products were exempt from duty, and the price of the final products remained constant, indicating that the duty incidence was not included in the price. The Commissioner (Appeals) also considered the affidavit and Chartered Accountant certificate provided by the respondent, which supported their claim.

Conclusion:
The High Court upheld the findings of the Tribunal and the Commissioner (Appeals), concluding that there was no passing of the duty incidence to the customers, and therefore, the question of unjust enrichment did not arise. The Court found no perversity in the findings and dismissed the appeals, stating that no substantial question of law was involved.

Judgment:
The Civil Miscellaneous Appeals were dismissed, and no costs were awarded. The decision of the Tribunal was affirmed, and the refund was not barred by the doctrine of unjust enrichment.