2019 (10) TMI 162 - AT - Central Excise

Refund of excess Excise duty paid - unjust enrichment - authorities below have rejected the refund claim holding that as per the doctrine of unjust enrichment the duty has been passed on to the buyer - HELD THAT - The authorities below have rejected the refund claim holding that as per the doctrine of unjust enrichment the duty has been passed on to the buyer. Mere issuance of credit notes will not establish that the duty has not been passed on to another. The Hon ble Apex Court in the decision of COMMISSIONER OF CENTRAL EXCISE MADRAS VERSUS M/S ADDISON CO. LTD. 2016 (8) TMI 1071 - SUPREME COURT has well analysed the issue and held that mere issuance of credit notes cannot be the sole basis for holding that the duty has been borne by the assessee and that it has not been passed on to another. The credit of the sanctioned refund to the Consumer Welfare Fund is legal and proper - Appeal dismissed - decided against appellant.

Summary

Issues Involved:
Refund claim of excess Excise Duty paid on petroleum products, rejection on grounds of unjust enrichment, applicability of the doctrine of unjust enrichment, issuance of credit notes, Consumer Welfare Fund, interpretation of the decision in Commissioner of Central Excise, Madras Vs. M/s. Addison & Co. Ltd.

Analysis:
The appeals before the Appellate Tribunal CESTAT CHENNAI involved the refund claims filed by the appellants for excess Excise Duty paid on petroleum products. The appellants had cleared furnace oil, raw naptha, and LPG to various buyers at rates fixed between the parties, resulting in the payment of excess Excise Duty. The appellants issued credit notes to the buyers for the excess duty charged and subsequently filed refund claims. The central issue revolved around the doctrine of unjust enrichment and whether the duty had been passed on to the buyers.

The refund claims were initially sanctioned by the refund sanctioning authority, but the amount was ordered to be credited to the Consumer Welfare Fund. Subsequently, the Commissioner (Appeals) upheld the rejection of the refund claims, citing the decision of the Hon'ble Apex Court in Commissioner of Central Excise, Madras Vs. M/s. Addison & Co. Ltd. The Commissioner relied on the principle that the mere issuance of credit notes does not establish that the duty has not been passed on to another party.

During the proceedings, the appellant's advocate argued that since the goods were consumed by the buyers and not resold, it was evident that the duty had not been passed on, and therefore, the refund should not have been credited to the Consumer Welfare Fund. On the other hand, the authorized representative for the respondent supported the findings in the impugned order, emphasizing the similarity of facts to the case of M/s. Addison & Co. Ltd. as per the decision of the Hon'ble Apex Court.

After hearing both sides, the Appellate Tribunal held that the doctrine of unjust enrichment applied in this case, and the duty had indeed been passed on to the buyers. Citing the decision in M/s. Addison & Co. Ltd., the Tribunal concluded that the mere issuance of credit notes was not sufficient to prove that the duty had not been passed on. Therefore, the credit of the sanctioned refund to the Consumer Welfare Fund was deemed legal and proper, and the impugned orders did not warrant any interference. Consequently, the appeals were dismissed by the Tribunal.

In summary, the judgment emphasized the application of the doctrine of unjust enrichment in determining the eligibility for refund claims of excess Excise Duty paid on petroleum products, highlighting the significance of passing on the duty to another party and the insufficiency of mere issuance of credit notes as evidence to the contrary.