Unjust enrichment not applicable when duty paid under protest

PJ/Case Law /2016-17/3256

Case:-COMMISSIONER OF C. EX., JAIPUR-II VERSUSSUZUKI SYNTHETICS PVT. LTD.

Citation:- 2016 (337) E.L.T. 314 (Tri. - Del.)

Brief Facts-This appeal by Revenue is against order dated 17-11-2006 of Commissioner (Appeals-II), Jaipur. The respondents are engaged in the manufacture of fabrics of woollen, cotton and man made blended fabrics liable to Central Excise duty. They have filed two refund claims for a total amount of Rs. 77,53,152/- on the ground that they have paid excess Central Excise duty under protest earlier as per directions of the Department. The claims were rejected by the original authority. On appeal, the Commissioner (Appeals), Jaipur allowed the appeals. The claims for refund were allowed subject to verification as per law. The original authority vide his order dated 29-6-2006, sanctioned Rs. 22,73,462/- by way of credit in Cenvat account; sanctioned Rs. 21,92,367/- but credited to the Consumer Welfare Fund; rejected an amount of Rs. 32,87,323/-. On appeal by the assessee/respondent, the Commissioner (Appeals) vide the impugned order allowed the appeal accepting the plea of the respondent that there is no unjust enrichment in this case.

Appelants Contention-The learned AR submitted that in terms of provisions of Section 12B of the Central Excise Act, 1944, the assessee has not proved that they have not passed on the duty incidence to any other person. The buyers of goods belong to same group/family and as such documentations submitted are not free from doubt. The duty payment on their own, only in respect of the another family unit, is not acceptable as accounting is doubtful.

Respondents Contention- Learned Counsel for the respondent submitted that the impugned order is legally correct and there is no reason to modify the same.

Reasoning Of Judgement-On hearing both sides and perusal of the case records it is found that that the Assistant Director (Cost) of the department indicated in his report dated 23-12-2005 that in the year 2003-04 a sum of Rs. 30,35,826/- was deposited as duty under protest. The said amount was shown as ‘loans and advances’ in the balance sheet. The AD (Cost) further indicated that the costing of some varieties also shows that the cost did not include 15%. In his further report dated 23-2-2006 he stated that the respondent have not passed on incidence of said duty to their customer. It is also noticed that in this case the respondent is a job worker and showing the excise duty separately in the Excise invoice. Further, the respondent had also submitted a certificate of Chartered Accountants to state that they (respondents) had not recovered excise duty on additional 15% cost of grey fabrics from the customers.
In view of the above findings, the appeal is dismissed.

Decision:- Appeal dismissed.

Comment:- The essence of the case is that refund is not deniable when Assistant Director (Cost) of Department and Chartered Accountant have certified that duty paid under protest is shown in balance sheet as “loans and advances” and not passed on to buyers.

Prepared By-Ritika Mehta

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PJ/Case Law /2016-17/3256

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