CESTAT Rejects Eveready Industries' Rs. 15.3 Lakh Excise Refund Claim by virtue of Unjust Enrichment Doctrine [Read Order]

The Allahabad bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has dismissed Eveready Industries India Ltd.'s appeal for a refund of Rs. 15.31 lakh in excise duty, citing the doctrine of unjust enrichment. The case revolved around the company's claim for a refund of excess excise duty paid on batteries supplied as part of a promotional offer with their Compact Fluorescent Lamps (CFLs).

Coming to the facts of the case, Eveready Industries, a manufacturer of dry cell batteries, had filed a refund claim on 13-7-2012, under Section 11B of the Central Excise Act, 1944. The claim was for excess excise duty paid on batteries supplied free of cost (FOC) with select Eveready CFLs. The company argued that the batteries were not meant for retail sale and, therefore, should not have been assessed under Section 4A of the Central Excise Act, which mandates valuation based on the Maximum Retail Price (MRP). Instead, they contended that the valuation should have been based on the production cost under Rule 8 and Rule 11 of the Central Excise Valuation Rules, 2000.

The refund claim was rejected by the Assistant Commissioner of Central Excise on the grounds of unjust enrichment.

The assessee who was aggrieved by the above decision appealed before the CESTAT for relief.

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The appellant’s counsel contended that the issue was no longer res integra, citing several precedents where courts had ruled that goods supplied free of cost were not subject to retail sale valuation under Section 4A of the Central Excise Act. They also contended that the doctrine of unjust enrichment did not apply in this case since the batteries were supplied free of cost and no duty burden was passed on to the customers.

The Revenue’s counsel contended that the price of the CFLs was included in the cost of the batteries supplied free of charge.

The bench noted that the company had not appealed against the self-assessment of duty at the time of clearance of the goods, and therefore, the refund claim under Section 11B of the Central Excise Act will not sustain.

The bench relied on the decision of Addison & Co. Ltd. [2016 (339) ELT 177 (SC)], in which the

apex court held that ‘the doctrine of unjust enrichment is a just and salutary doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law.’

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The  CESTAT, comprising P.K. Choudhary (Judicial Member) and Sanjiv Srivastava (Technical Member), found no merit in Eveready's appeal and dismissed the appeal.

To Read the full text of the Order CLICK HERE

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