Case Law Details
Aurolab Vs Commissioner of GST & Central Excise (CESTAT Chennai)
The issue is whether the refund claim is hit by the bar of unjust enrichment. Undisputedly, the appellant has mentioned the duty element in the invoices issued to the buyers. The presumption envisaged in section 12B of Central Excise Act, 1944 then applies and the burden rests upon the appellant to rebut this presumption. In para 12 of the impugned order, the Commissioner (Appeals) has discussed that though the appellants produced Cost Accountant and Chartered Accountant’s certificate, these are not certificates issued by their statutory auditors. Further, it is also not stated in the certificates that they have scrutinized financial statements of the appellant. Even after remand, the appellant has not been able to produce necessary documents to substantiate that they have not passed on the incidence of duty to the buyers of the goods.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Brief facts are that the appellant is engaged in the manufacture of suture needles and micro surgical blades. They are registered with the Central Excise Department. The classification of suture needles was under dispute and finally settled to be under Chapter Heading 90 of CETA, 1985. The suture needles falling under Chapter 90 attracts nil rate of duty under Sl. No. 268 of Notification No. 6/2003-CE dated 1.3.2003 (specified in List 38 appended to Notification No. 21/2002-Cus dated 1.3.2002). The appellant continued to pay the duty on the needles and blades till 12.12.2005. Thereafter, vide letter dated 12.12.2005, the appellant informed the jurisdictional officer that they would not be paying excise duty with effect from 12.12.2005 since those goods attract nil rate of duty. The appellant filed a refund claim dated 22.12.2005 for refund of Rs.17,07,818/-being the duty paid by them mistakenly on suture needles. A Show Cause Notice was issued to show cause as to why the refund claim should not be rejected as the same is hit by unjust enrichment. After due process of law, the original authority rejected the refund claim and the same was upheld by the Commissioner (Appeals). The matter reached the Tribunal and vide Final Order No. 41032/2015 dated 12.8.2015, the matter was remanded to the Commissioner (Appeals) to examine the issue after granting reasonable opportunity of hearing. The matter was taken up for rehearing by the Commissioner (Appeals) as per the directions of this Tribunal. The Commissioner (Appeals) vide the order impugned herein again rejected the appeal filed by the appellant and upheld the order passed by the original authority dated 7.12.2009. Aggrieved by such order, the appellant is once again before the Tribunal.
2. On behalf of the appellant, learned counsel Shri M.N. Bharathi appeared and argued the matter. He submitted that the Show Cause Notice was issued to the appellant proposing to reject the refund claim on the ground that they have passed on the duty incidence to the buyer and that the refund is hit by unjust enrichment. Though the duty element is shown separately in the invoice, as the appellant has charged cum-duty value and the value being constant, the same has been absorbed by them.
The sale price of the goods before and after the event of payment of duty remains the same and therefore unjust enrichment will not arise. The appellants have not passed on the burden of duty to the buyers. This duty element is included in the cost structure with the result that their profit margin is reduced. This would show that the excise duty is borne by them. He prayed that the appeal may be allowed.
3. The learned AR Shri R. Rajaraman supported the findings in the impugned order. He adverted to the discussions made by Commissioner (Appeals) in para 9 to 12. The learned AR argued that it is an admitted position that the appellant has mentioned the duty element in the invoices separately. The presumption under sec. 12B of Central Excise Act, 1944 applies and it is deemed to have been passed on to the buyer of the goods. The appellant has not furnished relevant documents to prove that the incidence of duty has not been passed on to the buyers. Though the appellant had produced the Cost Accountant and Chartered Accountant’s certificate, it is discussed by the Commissioner (Appeals) that these certificates are not issued by their statutory auditors. Further the auditors have not indicated that they have examined the financial records of the appellant. Though the appellant contends that they have absorbed the duty element to their cost structure, there is no evidence produced by them to prove the same. He submitted that the discussions made by the Commissioner (Appeals) would prove that the refund claim is hit by unjust enrichment. He prayed that the appeal may be dismissed.
4. Heard both sides.
5. The issue is whether the refund claim is hit by the bar of unjust enrichment. Undisputedly, the appellant has mentioned the duty element in the invoices issued to the buyers. The presumption envisaged in section 12B of Central Excise Act, 1944 then applies and the burden rests upon the appellant to rebut this presumption. In para 12 of the impugned order, the Commissioner (Appeals) has discussed that though the appellants produced Cost Accountant and Chartered Accountant’s certificate, these are not certificates issued by their statutory auditors. Further, it is also not stated in the certificates that they have scrutinized financial statements of the appellant. Even after remand, the appellant has not been able to produce necessary documents to substantiate that they have not passed on the incidence of duty to the buyers of the goods.
6. After appreciating the facts, I am of the view that the rejection of refund claim is legal and proper. The appeal is devoid of merit. The same is dismissed.
(Pronounced in open court on 1.11.2022)
