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M/s , Makson Nutrition Food India Pvt. Ltd. Versus CCE, Bhopal

Refund - unjust enrichment - excess payment of duty due to valuation dispute - appellant then paid duty on the value determined under section 4A for the period 19.11.2002 to 15.12.2003 under protest - later it was held that duty was payable on value u/s 4 - Whether the appellant is eligible for refund of differential duty - Held that:- Amount provided by HLL to the Appellant Company were given as unsecured loan , vide clear understanding, obligation and undertaking on the part of the Appellant C .....

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filled to be eligible for refund of duty. Sub-section (3) makes clear that notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any Court, the refund shall be made only if the condition stated in sub-section (2) are fulfilled. Clause (d) of sub-section (2) provides that the manufacturer has to establish that the incidence of such duty has not passed on to any other person. If the incidence of duty is passed on to any other pe .....

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distributors/stockist, who are large wholesalers of the various confectionary products and other products. The redistributors/stockist have the option of selling directly to the wholesalers in an area which are not directly covered by the redistributors/stockiest. In such situation, it is for the appellant to establish with documents that the incidence of duty has not been passed on to any other person. - if in the invoices raised by the Appellant to HLL, the higher duty paid on the value determ .....

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o HLL as soon as the Appellant gets refund of the excise duty; the refund would not be hit by the bar of unjust enrichment. - Matter remanded back - Decided in favour of assessee. - Appeal No. E/3360/2005-EX[DB] - Final Order No.51775/2015 - Dated:- 4-6-2015 - Mr. Rakesh Kumar, Member (Technical) And Smt. Sulekha Beevi C.S., Member (Judicial) For the Petitioner : Shri Ravinder Narain, Advocate For the Respondent: Shri Pramod Kumar, JCDR ORDER Per: Sulekha Beevi C.S. The issue that arises for det .....

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1944 (hereinafter referred to as Act). It is the case of the appellant that on 17.09.2002, the officers of Central Excise visited the factory and took some samples. A search was further made on 19.09.2002 and the officers seized the goods manufactured by the appellant. as according to the Department, the value was to be determined under section 4A. As the appellant apprehended recurrence of such coercive steps, the appellant applied for provisional assessment under Rule 7 of Central Excise Ru .....

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luation on merits holding that duty was payable on the value determined section 4A of the Act and not on the transaction value determined under section 4 of the Act. 4. The Writ petition which was then pending before Honble High Court was disposed of by taking into account the submissions made by both sides before the Honble High Court. In para 7 and 8 of the judgement, Honble High Court has considered the submissions of both sides and stated that appellant would be entitled to refund of diff .....

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leared for the earlier period from 6.6.2002 to 1.11.2002 and for confiscation of the goods seized on 19.9.2002. The second show cause notice dt.2.4.2003 was in respect of seizure of the truck which was seized on 2.11.2002 in which the goods were being transported. The above two show cause notices were adjudicated by the Commissioner of Central Excise by order dt.11/12.12.2003. The Commissioner decided the issue of valuation in favour of the appellant holding that the appellant had paid duty corr .....

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ces as stated above, regarding valuation for the earlier period was discharged; the Commissioner (Appeals) dismissed the appeal of the appellant vide order dt.27.4.2004 and held that valuation under section 4A is applicable. Against this order, the appellant filed appeal No.E/2945/2004-NB(C) before the Tribunal. The Revenue also filed an appeal No.E/610/2005-NB(A) against the order dt.11/12.12.2004 of the Commissioner of Central Excise. Both these appeals were heard together and disposed of by t .....

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nd claim holding that it is hit by the bar of unjust enrichment. 8. The appellant then filed an appeal before the Commissioner (Appeals) and vide order dated June, 2005, the Commissioner (Appeals) upheld the rejection of refund claim. Aggrieved by this order of the Commissioner (Appeals) rejecting the claim for refund of differential duty, the appellant is now before us. 9. The learned Counsel for the appellant contended that the appellant is entitled to refund of differential duty paid under pr .....

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dispute was paid by the appellant by obtaining an unsecured loan from HLL. As per agreement with HLL, the appellant is bound to return the same to HLL on receiving the refund. It is also the case of the appellant that HLL has absorbed higher duty and has not passed it on to other person. 10. According to the learned JCDR, Shri Pramod Kumar the agreement entered into by the appellant and HLL cannot be made the basis for determination of the question whether the appellant had borne the incidence o .....

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hit by unjust enrichment. He also relied on the decision rendered by the Tribunal in General Manager, Govt.Milk Scheme v.CCE, Nagpur reported in 2010 )19) STR 798 (Tri.-Mum.). 11. Heard both sides. We have examined the records and rival submissions carefully. 12. To substantiate his first leg of argument learned Counsel for the appellant laid thrust on para 7 and 8 of the order of the Honble High Court of Madhya Pradesh at Jabalpur. According to the appellant, an interim arrangement was arrived .....

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2002 (referred to in the above appeal an marked Annexure-D) an interim arrangement was arrived at, so that as an interim measure, differential duty of excise was paid by the Appellant Company on the clear understanding and undertaking recorded on behalf of the Department i.e. if the issue on merits is decided in favour of the Appellant company, the differential duty paid as an interim measure would be returned. On the basis of the aforesaid arrangement and undertaking, in order to enable the App .....

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aforesaid. Thereupon, the Appellant Company deposited the aforesaid amount of differential duty under protest and without prejudice to their contention as to the correctness of the demand. 6. In the above circumstances, the aforesaid amount provided by HLL to the Appellant Company were given as unsecured loan, vide clear understanding, obligation and undertaking on the part of the Appellant Company that upon final decision on merits relating to the correct amount of duty payable, the refund of .....

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er section 4A of the Act, the duty so paid will be either refunded or will be adjusted. In view of the aforesaid statement of the learned counsel for the respondents, petitioner submits that he may be permitted to withdraw this petition with liberty to file appeal and to pay excise duty section 4A of the Act under protest and in case the appeal is decided in its favour, the same be refunded by the respondents. 8. In view of the aforesaid statement, petitioner is permitted to withdraw this petiti .....

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ing as put forth by the appellant. We do not find any whisper about an agreement/undertaking between the appellant and the department whereby the department has agreed to refund the differential duty to the appellant unconditionally. On plain reading of para 7 and 8 of the order of High Court what can be understood is that on considering the submissions made by both the sides, the High Court was of the view that the appellant had a chance to get refund if higher duty is paid. It is noteworthy to .....

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uty paid excessively as stated by the learned counsel of the respondent. The word refund has to be read and understood as eligible refund under the provisions of law. The issue of unjust enrichment on the ground of passing on the higher duty to the customer (HLL) was not an issue before High Court. Further, the appellantt has not undertaken before the High Court that the incidence of higher duty will not be passed on to others. 15. Needless to say that to receive refund, the appellant has to b .....

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the Fund : Provided that the amount of [duty of excise and interest, if any, paid on such duty] as determined by the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to - (a) rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are expo .....

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, if any, paid on such duty] to any other person; (e) the [duty of excise and interest, if any, paid on such duty] borne by the buyer, if he had not passed on the incidence of such [duty and interest, if any, paid on such duty] to any other person; (f) the [duty of excise and interest, if any, paid on such duty] borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify : Provided further that no notification under clause (f) of th .....

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hall be made except as provided in sub-section (2). 16. From the perusal of sub-section (2) of section 11B, we find that sub-section (2) lays down the conditions to be fulfilled to be eligible for refund of duty. Sub-section (3) makes clear that notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any Court, the refund shall be made only if the condition stated in sub-section (2) are fulfilled. Clause (d) of sub-section (2) p .....

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pellant fails. 17. Let us now proceed to analyze whether the claim for refund of duty is hit by the bar of unjust enrichment. The appellant is a contract manufacturer for HLL. According to the appellant, the Sourcing Agreement entered into with HLL stipulates that excise duty paid by the appellant on manufacture of products is to be reimbursed by HLL. A copy of Sourcing Agreement dt.10.1.2003 has been produced alongwith additional affidavit filed on 5.1.2015. 18. The goods manufactured by the ap .....

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o any other person. 19. Learned Counsel for the appellant submitted that HLL had absorbed the higher duty. That the higher duty was paid under protest by the appellant by obtaining unsecured loan from HLL, and in the event of refund of duty, the appellant is bound to return the same to HLL. In support of this contention, the appellant relies upon the Sourcing Agreement as well as Termination Agreement entered into by the appellant with HLL. In sub-clause (ii) of para 10 of the Termination Agreem .....

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