Bar of unjust enrichment is applicable to duty only and not for interest.

PJ-Case law-2013/14-1584

Case:- AMJ CORPORATION VS COMMISSIONER OF CENTRAL EXCISE, BELAPUR

Citation:- 2013 (291) E.L.T. 563 (Tri. - Mumbai)

Issue:-

Brief Facts:- Assessee paid interest inadvertently calculating the interest payable up to 20/1/2011 instead of calculating it up to 5/2/2008 and 5/4/2008. After realisation of the fact that excess interest was paid, the assessee filed the refund claim for the same. Refund claim of excess interest paid was denied on the ground of unjust enrichment.

Appellant’s Contention:- The learned Counsel for the appellant submits that during the period May, 2007, the appellant cleared motor parts and subsequent to clearance, the appellant received price revision list for the said parts in the year, 2008. Immediately on receipt of price revision in January, 2008 and March, 2008, the appellant raised the supplementary invoice with the revised price for the supplies effected from May, 2007 and paid differential duty on account of price revision. The appellant did not pay interest on the differential duty from May, 2007, till January, 2008, and March, 2008. On 20.01.2011, the appellant paid interest inadvertently calculating the interest payable upto 20.01.2011 instead of calculating it upto 5.2.2008 and 5.4.2008. On realisation that they have paid excess interest, they filed refund claim of excess interest paid amounting to Rs. 3,14,300/- on 25.08.2011, which was denied by both the authority on the grounds of unjust enrichment. It is further submitted that the excess amount of interest paid has been shown in balance sheet as receivable and the appellant has paid income tax also on the said excess amount of interest receivable and the onus is on the department to prove that what appellant is saying is incorrect. As the appellant has discharged their onus by proving that the burden of excess interest has not been passed on to the customers on the basis of entry shown in the balance sheet. The appellant relied upon the following decisions:-

·         Dabur India Ltd Vs. Comm. of Central Excise, Ghaziabad- 2008 (228) E.L.T. 23 (Tri.-Del)

·         Corning S.A. v. Comm. of Central Excise, New Delhi-2005 (192) E.L.T. 355 (Tri.-Del)

·         Comm. Of Central Excise, Chennai-III v. Saralee Household & Bodycare India (P) Ltd.-2007 (216) E.L.T. 685 (Mad)

·         Sanghi Shoes Accessories Pvt. Ltd. v. Comm. Of Customs (Imp), Nhava Sheva-2008 (224) E.L.T. 95 (Tri.-Mum)

It is further argued that the amount paid subsequent to clearance of the goods is not affected by doctrine of unjust enrichment. To support this contention, he relied on the following judgements :-
·         Shree Percoated Steels Ltd. v. CCE, Pune-III-2008(223) E.L.T. 463 (Tri.-Mum.)

·         System engineers v. CCE Pune-2008(224) E.L.T. 463 (Tri.-Mum.)

·         CCE, Pune-II v. Krishna SSK Ltd.- 2007(220) E.L.T. 192 (Tri.-Mum.)

Respondent’s Contention:- The learned AR reiterates the findings of the lower authorities.

Reasoning of Judgement:- Tribunal considered the submissions made from both sides. The dispute in this case is only regarding the refund of excess interest paid by the appellant by mis-calculating the interest payable by them on supplementary invoices. As the applicant has filed the refund claim and the same has been denied on the ground that the appellant had not discharged their burden of unjust enrichment, the same is not sustainable as the Revenue has failed to produce any evidence that the appellant has recovered the amount of interest paid by them on supplementary invoices from their customers. While raising the supplementary invoices, the appellant only recovered duty from their customers and no interest has been recovered from the customers. Section 12(b) of the Central Excise Act, 1944, provides that every person , who has paid the duty of excise on the goods under this Act, shall unless the contrary is proved by him, be deemed to have passed full incidence of such duty to the buyers of such goods. From the said provision, it is very much clear that bar of unjust enrichment is applicable to the duty only and not for the interest. As in this case, both the lower authorities have held that the bar of unjust enrichment has not been proved by the appellant, the same is not sustainable as Central Excise Act, 1944, does not provide any presumption of passing the incidence of interest on the buyers. Therefore, the impugned order is not sustainable in the eyes of law. The same is set aside and the appeal is allowed with consequential relief.

Decision:-Appeal allowed.

Comment:- It can be concluded from this case that the bar of unjust enrichment is applicable only for duty and not for interest element and so refund of excess interest paid is admissible to the assessee.

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PJ-Case law-2013/14-1584

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