In a recent case, the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) Chandigarh bench held that Cenvat Credit refund hit by unjust enrichment when incidence of duty passed on to customers.The Tribunal viewed that it is incumbent upon the appellants who are claiming refund to satisfy the authorities with evidence to substantiate the quantum and fact of their clearances to institutional customers.
M/s Jammu & Kashmir Cements Ltd, the appellants are manufacturers of cement; the appellants claim that they have erroneously paid excess duty at the rate of 250 PMT in place of Rs.170/- PMT during the period December 2008 to October 2009 and paid at the rate of Rs. 370/- PMT instead of Rs.250/- PMT during October 2008 to March 2009 though concessional rate of duty was available in terms of serial no.1B of the Notification No.04/2006-CE dated 01.03.2006; as they supplied cement to armed forces and Government undertakings, the packages of cement even though of 50 KG are not subjected to MRP levy as being supplies to institutional/ industrial users.
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Accordingly, the appellants filed refund claims for Rs.54,57,431/- and Rs.61,56,800/- for the relevant periods; the original authority rejected the refund claims and such rejection was upheld by the appellate authority on merits as well as on the issue of unjust enrichment.
Consultant for the appellants submitted that a clarification has been issued to the appellants by the legal meteorology department to the effect that supplies of cement in prepacked form meant for Government departments/ agencies i.e institutional supplies are exempted from the declaration of MRP; such packs must carry conspicuously marking of institutional supply like Government supply only, in case of supplies to Government.
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Authorized Representative for the Department submits that Commissioner (Appeals) observed that on a query from the jurisdictional Range Superintendent, the appellants vide their letter dated 01.10.2009 have admitted to have made clearances in 50 KG bags to the Government/ semi-Government/ stockiest as well as to the direct consumers and in the appeal papers filed along with their appeals, have not furnished any evidence with regard to sale to institutional buyers only, refunds in respect of which have been claimed by them.
Consultant for the appellants submitted that copies of some invoices were attached along with the written reply to the show cause notice and as such, it cannot be said that the appellants have not submitted any proof. Authorized Representative stated that even if the appellants submit proof of supplies to institutional buyers, the refunds are hit by the clause of unjust enrichment as it is clear from the invoices that there are four components i.e. Basic Price, Basic Excise Duty, Education Cess and Secondary and Higher Education Cess; as such, it is evident that the incidence of duty has been passed on to the customers and the refunds are hit by unjust enrichment.
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Consultant for the appellants submitted in re-joinder that the supplies are to institutional buyers who have no way to utilize CENVAT credit and therefore, bar of unjust enrichment is not applicable to supply to Government/ Public Distribution System etc; as held in many cases that the presumption of unjust enrichment does not exist.
It was evident that there was no occasion for the authorities below to verify the claim of the appellants that they have supplied only to institutional buyers as complete record does not seem to have been placed on record. In view of the categorical finding in the impugned order that the appellants have not submitted records and in view of the data sheets submitted by the Consultant, there are reasons to believe that there are supplies to other than institutional customers.
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The Tribunal viewed that it is incumbent upon the appellants who are claiming refund to satisfy the authorities with evidence to substantiate the quantum and fact of their clearances to institutional customers. Also as regards the issue of unjust enrichment, Consultant for the appellants submitted that he can provide certificates/ affidavits to prove that their institutional customers i.e army/ Government agencies etc. have not availed CENVAT credit.
A two member S. S. Garg, Member (Judicial) and P. Anjani Kumar, Member (Technical) held that the Bench cannot sit in judgment over a record/ evidence to which the lower authorities were not privy to. The tribunal disposed of the appeals by way of remand to the original authority with a direction that the proceedings shall be completed within 12 weeks, of receipt of the certified copy of the order. The appellants are also directed to submit to the original authority evidence substantiating their claims to the original authority.
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