Refund of excess interest - Sec 12B it is clear that bar of unjust enrichment is applicable to duty only - law does not provide any presumption of passing incidence of interest on buyers - Appeal allowed: CESTAT
By TIOL News Service
MUMBAI, APR 01, 2013: THE facts of the case are -
+ During the period May, 2007, the appellant cleared motor parts.
+ A price revision was received by the appellant from the consignee in the month of January, 2008.
+ In March, 2008, the appellant raised Supplementary invoice with the revised price for the supplies effected from May, 2007 and paid differential duty thereon. No interest was paid u/s 11AB of the CEA, 1944 on this differential duty.
+ On 20.1.2011, the appellant paid interest. Inadvertently while calculating the interest, the appellant considered the period from month of clearance till 20.01.2011 instead of calculating it up to 5.2.2008 and 5.4.2008. On realizing that they have paid excess interest, they filed refund claim of excess interest paid amounting to Rs. 3,14,300/- on 25.8.2011, which was denied by both the lower authorities on the ground of unjust enrichment.
So, the appellant is before the CESTAT and submits -
+ that the amount of excess interest paid had 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 is entitled for refund.
+ Following decisions are inter alia relied upon -
Corning S.A. Vs. CCE, New Delhi - (2005-TIOL-622-CESTAT-DEL)
CCE, Chennai - III Vs. Saralee Household & Bodycare India (p) Ltd. - (2006-TIOL-1737-CESTAT-MAD)
+ It is further argued that the amount paid subsequent to clearance of the goods is not affected by doctrine of unjust enrichment in view of inter alia the decision System Engineers Vs. CCE, Pune - (2009-TIOL-1023-CESTAT-MUM)
The Revenue representative did not add much to what the lower authorities had held.
The Bench observed -
“6. In this case, the dispute 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 had 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 the 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 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.”
(See 2013-TIOL-532-CESTAT-MUM)
