2005 (7) TMI 160 - AT - Central Excise

Summary

Issues Involved:

1. Classification of the product Pan Masala/Gutkha for duty purposes.
2. Refund claim for excess duty paid under protest.
3. Application of the bar of unjust enrichment.
4. Refund claim for duty paid on charity/Dharmada amount.

Detailed Analysis:

1. Classification of the Product:

The appellants, an assessee under the Central Excise Act, 1944, were paying duty for Pan Masala/Gutkha under Heading 2106.00. However, they were directed by the Central Excise Authorities of the Vadodara factory to pay duty under Heading 2404.40 at a higher rate. The assessee complied with this direction and paid the higher duty for January and February 2001 under protest.

2. Refund Claim for Excess Duty Paid Under Protest:

The assessee filed a refund claim on August 13, 2001, for the excess duty paid during January and February 2001 under protest. The claim also included duty paid on the Dharmada amount included in the invoice value due to the change in classification. The refund claim was initially rejected by the Deputy Commissioner on the grounds that the incidence of duty paid was passed on to the customer, invoking the bar of unjust enrichment.

3. Application of the Bar of Unjust Enrichment:

The Deputy Commissioner found that the price structure was changed as evident from the invoices issued before and after the change of duty structure. The duty was shown separately in the invoices, indicating that the incidence of duty was passed on to the customer, and thus, the refund was not due to the assessee. This decision was upheld by the Commissioner (Appeal), who noted that the appellants did not produce documentary evidence to prove that the differential duty was absorbed by them in their pricing mechanism.

4. Refund Claim for Duty Paid on Charity/Dharmada Amount:

The Commissioner (Appeal) acknowledged that the appellants paid Central Excise duty amounting to Rs. 5,79,125/- on charity/Dharmada amount under protest. The duty paid by making debit entries in PLA subsequent to the date of clearance of the goods was not hit by the presumption of unjust enrichment. The refund of Rs. 5,79,125/- was therefore allowed.

Tribunal's Findings:

a. Examination of Facts:

The Tribunal noted that the appellants had no alternative but to comply with the directions of the Vadodara Commissionerate, which were not followed by other jurisdictions. The appellants informed their C&F agents about the higher duty discharge due to reclassification and absorbed the excess duty demands themselves, maintaining the same unit price.

b. Detailed Comparison:

The Tribunal compared the price structure before and after reclassification and found that the total price per case remained unchanged, indicating that the excess duty was not passed on to the customers. The Tribunal also noted contradictions in the findings of the Commissioner (Appeal) regarding the price structure.

c. Relevant Case Laws:

The Tribunal referred to several case laws, including the Supreme Court's judgment in Mafatlal Industries Ltd. v. Union of India, which clarified that the manner of preparing the invoice is not conclusive in determining whether the duty burden was passed on to the buyer. The Tribunal also noted that the appellants had filed an affidavit stating that they had not passed on the burden of duty to another person.

Conclusion:

The Tribunal found no reason to bar the refund on grounds of unjust enrichment and ordered the refund to be granted. The appeal was disposed of accordingly, and the order was pronounced in court.