Hindustan Lever Ltd. Vs. the Commissioner of Central Excise, Nasik - Court Judgment

Per: P.G. Chacko

1. These appeals are against the rejection of two refund claims, one for the period from 10/04/99 to 30/06/99 and the other for the period from 30/06/99 to 04/07/99. The refund was claimed for duty paid on frozen desert, ice cream, etc. (falling under Chapter 21 of CETA schedule) on which duty had been paid on MRP basis in terms of Section 4A of the Central Excise Act. 1944. During the period from 10/04/99 to 29/06/99, the appellant had cleared their products with the MRP of Rs.3/- printed thereon, but duty was paid by mistake on the basis of the MRP declared in the relevant price declaration (Rs.5/-). Subsequently, the assessee realized their mistake of having paid duty on the basis of the higher MRP wrongly declared by them, and accordingly, claimed refund of the excess duty paid by them. This claim was allowed by the original authority after considering the documents produced by the party. The appellate authority found that the lower authority had not verified the aspect of unjust enrichment. The appellate authority found that all the relevant documents had not been produced. It was found that, though the invoices covering clearances of goods from the factory were made available, all the invoices covering clearances of the goods from all the depots were not produced to establish that the incidence of duty had not been passed on to the buyers. The ld. Commissioner (Appeals) rejected the refund claim on the ground that the claim was barred by unjust enrichment. The appellate Commissioner’s order is under challenge in the first appeal before us.

2. During the period from 30/06/99 to 04/07/99, the assessee paid duty on similar clearances of their products in terms of Section 4A of the Act, by claiming abatement to the extent of 40% from MRP. The relevant price declaration had also claimed this abatement. Subsequently they realized that they were entitled to claim abatement to the extent of 45% for the said period under notification No.46/99-CE dated 30/06/99. Accordingly, they filed a refund claim for the excess duty paid by them. This claim was also allowed by the original authority, but disallowed by the appellate authority. The appellate authority stated the same reasons for rejecting this refund claim of the assessee.

3. After hearing the ld. Counsel for the assessee (appellant) and the ld. DR, we find that, in both the cases, the original authority took the view that the question of unjust enrichment did not arise. The appellate authority did not agree with this view. It found that the invoice-wise details of clearances (from factory) with cross reference to depot sale invoices had not been furnished by the party. The Chartered Accountant s certificate produced by the party was held to be insufficient. In the circumstances, the ld. Commissioner (Appeals) concluded that the assessee had failed to establish that the incidence of duty had not been passed on to their buyers. The ld. Counsel argues that the bar of unjust enrichment is not applicable to a claim for refund of duty paid in terms of Section 4 of the Act. In this connection she relies on CCE, Hyderabad Vs. Microraj Electronics Pvt Ltd., (2008 (221) ELT 213 (Tri-Bang), Girish Foods and Beverages (P) Ltd., Vs. CCE, Pune (2007 (211) ELT 388 (Tri-Mimbai) and CCE, Pondicherry Vs. Whirlpool of India Ltd., (2005 (191) ELT 1087 (Tri-Chennai).

4. On the other hand, it is submitted by the ld. DR that, in the facts and circumstances of this case, the burden of duty having been passed on by the depots to their customers cannot be ruled out. It is submitted that, without all the relevant depot invoices, it is not possible to conclusively infer that the incidence of the excess amount of duty paid by the assessee had not been passed on to others.

5. After considering the submissions, we find that the peculiar facts of the present case are different from those of the cited cases. It is not in dispute that the original authority did not address the question whether the incidence of the excess duty paid by the assessee had been passed on to customers. This is because that authority did not consider the bar of unjust enrichment to be applicable to the subject refund claims. In this scenario, we are of the considered view that the question of unjust enrichment has to be looked into by the original authority. While it will be open to the assessee to argue that the bar of unjust enrichment is not applicable to their refund claims, it will be incumbent on the adjudicating authority to consider the issue with an open mind. Therefore, we set aside the orders of the lower authority and allow these appeals by way of remand with a direction to the original authority to take fresh decision on the refund claims in question in accordance with the law after giving the party a reasonable opportunity of being heard.