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M/s. Lee Pharma Ltd. Versus CCE, Hyderabad

2016 (6) TMI 825 - CESTAT HYDERABAD

Refund of duty - unjust enrichment - 100% EOU - Exemption from payment of duty on procurement of goods used for R&D purpose - The department entertained the view that R&D was not part of manufacturing activity and that the benefit of exemption from payment of duty cannot be extended to inputs used for R&D purpose. - Held that:- Department has not adduced any evidence to establish that appellant showed the duty element in the invoices. It is their case that as the appellants showed the amount as .....

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has been passed on to buyers. When the Department argues that the incidence of duty has been passed on, not directly, but indirectly, then it is for the Department to establish the details of such passing of incidence of duty. It cannot be based on assumptions that incidence of duty is passed on. - The refund is not hit by the doctrine of unjust enrichment. - Decided in favor of assessee. - E/27709/2013 - A/30314/2016 - Dated:- 18-4-2016 - Ms. Sulekha Beevi, C.S., Member(Judicial) Shri Lali .....

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t R&D was not part of manufacturing activity and that the benefit of exemption from payment of duty cannot be extended to inputs used for R&D purpose. It is the case of the appellant that due to pressure from Department, the appellant made payment of ₹ 7,44,520/- and informed the Department. ii. The show cause notice was adjudicated and the original authority confirmed the demand of ₹ 7,44,520/-. The appellant filed appeal before the Commissioner(Appeals). After considering t .....

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claim for refund of ₹ 7,44,520/- paid by them. A show-cause notice was issued to the appellant proposing to reject the refund stating that the refund is hit by unjust enrichment. After due process of law, the original authority vide order dated 17/11/2013 rejected the refund claim as it is hit by unjust enrichment in terms of Section 11B read with Section 12B of Central Excise Act, 1944. iv. Against this order of rejection of refund, the appellant filed appeal and the Commissioner(Appeals .....

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-cause notice. The appellants are a 100% EOU engaged in manufacture of bulk drugs. They availed benefit of exemption from payment of duty under Notification No.52/2003-Cus. dated 31/03/2003 (on imported raw material) and Notification No.22/2003-CE dated 31/03/2003 (domestically procured inputs). As such no duty was to be paid on these inputs. The amount was paid during investigation on pressure from Department. The refund is now denied as being hit by unjust enrichment. Only reason for reaching .....

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rt, the appellant could not add the duty while working out the sale price. Further, being a 100% EOU, the appellants were exporting their finished goods under Bond. Hence no duty was charged in the invoice. The Department has not adduced any evidence to show that the cost of inputs used in R&D were factored into the price of exports or DTA sale. He pleaded that the appeal may be allowed. The learned counsel relied on the judgments laid in the following cases i. Advance Steel Tubes Ltd. [2014 .....

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idence to rebut the presumption. He relied upon the judgments laid in Bharat Electronics Ltd. Vs. CC (Import), Mumbai [2015(327) ELT 565 (Tri. Mum.)] and Hindustan petroleum Corporation Ltd. Vs. CC(Imports), Mumbai [2015(328) ELT 490 (Tri. Mum.)]. He submitted that the Commissioner(Appeals) has rightly sanctioned the refund and ordered it to be transferred to the Consumer Welfare Fund. 4. I have heard the rival submissions. The issue is whether the refund claim is hit by unjust enrichment. Secti .....

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l was allowed with consequential relief. When the appellant filed refund claim, it is now being retained/denied on the ground that the appellant failed to establish that incidence of duty has not been passed on to another. Department has not adduced any evidence to establish that appellant showed the duty element in the invoices. It is their case that as the appellants showed the amount as expenditure in the Profit & Loss account, the amount is factored in working out the sale price and so t .....

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