Applicaibility of Doctrine of unjust enrichment

PJ/Case Laws/2010-11/1201

Case:-COMMISSIONER OF C. EX., BANGLORE-I v/s OM PHARMACEUTICLES LTD.

Citation:-2011(268) E.L.T. 79 (Kar.)

Issue:- Doctrine of unjust enrichment – whether attracted – when assessee returned the duty initially passed on to the buyer and collected from him?

Brief Facts: - The assessee cleared the self generated alcohol which was not excisable. However when the Department insisted on payment of duty, they paid the amount ‘under protest’. Thereafter the Adjudicating authority held that the said goods were non excisable and sanctioned a refund of the said duty. However the amount was credit to the consumer Welfare Fund on the ground of unjust enrichment. Aggrieved by the order the assessee filed an appeal to the tribunal. Consequent to the order of the authority, the buyer raised debit notes on the assessee for amount of duty the assessee had paid on preparations of the self generated alcohols and passed on to it. Accordingly, the assessee repaid the duty collected from the buyer. Accordingly the tribunal had ordered for refund.

Appellant’s Contention:- The appellant was contended that in view of the judgment of the Apex court, the assessee was not allowed to the amount ordered to be refunded on the ground of unjust enrichment and as such the order passed by the original authority was in accordance with law and the tribunal had committed an error in affirming the said order.

Respondent’s Contention:- The respondents argued that the Doctrine of unjust enrichment applies only in the case of assessee having passed on the burden of duty to the customers, and then he would not be entitled to the refund of the said amount by virtue of any order passed by the authorities upholding the exemption or ordering the exemption or ordering for refund of the amount on any other ground.

Reasoning of Judgment:- The High Court held that the assessee have established their claim with documentary evidence i.e. in pursuance of the debit notes raised by the buyer, the assessee have repaid the duty paid by him to the assessee and therefore a case of unjust enrichment was not made out from the facts of the case and as such, assessee were entitled for refund. Further the duty was collected and after the order of the original authority the duty was repaid in terms of the understanding between the assessee and the buyer. It was also clear that the assessee had not passed in the duty liability to the customers trough initially he had passed on the liability, he had returned the said duty collected from the buyer. Therefore he was entitled to get back the duty, which he paid, and in accordance of law was not liable to pay. Therefore the Doctrine of unjust enrichment was not attracted to the facts of this case.

Decision:The appeal was dismissed.

Comment:- There were number of decisions on this count wherein the tribunal has transferred the refund claim to consumer welfare fund on the contention that the burden has been passed on initially to the buyer. Although the debit/ credit note has been issued subsequently yet it does not established that the burden of duty has not been passed on to the buyer. But High Court has clearly held that even if the assessee has returned the duty to the buyer then it is established that concept of unjustenrichment does not apply in this case.

Comments

PJ/Case Laws/2010-11/1201

Post a Comment

Query