The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that a refund is hit by unjust enrichment when the incidence of duty has been passed on to the buyers.
The appellant, Span Divergent Limited, is engaged in the manufacture of Diagnostic Reagents. The dispute arose regarding the classification of goods described as “Tuberculin PPD. It is a matter of record that the appellant had filed a classification list in the year 1993 declaring that the impugned goods namely Tuberculin PPD are classifiable under CETH 30.02 and chargeable to nil rate of central excise duty.
The classification of Tuberculin PPD under CETH 30.02 was not accepted by the authorities and the first adjudication order dated 13.05.1994 was passed by the jurisdictional Assistant Commissioner deciding that the classification of the impugned product is under CETH3005.90 and chargeable to central excise duty with the rate of 15% ad valorem.
The appellants preferred an appeal before the Commissioner (Appeals) against the order in original whereunder the classification of their product was decided under CETH 3005.90. The Commissioner (Appeals) vide the order held that impugned goods are cultures of micro-organisms and they are not Diagnostic Reagents.
It has been the contention of the Advocate appearing on behalf of the appellant that it was wrong on the part of the Commissioner (Appeals) to hold that burden of the excise duty has been passed on to the consumers has been proved by the Department in this case, that the adjudicating authority failed to appreciate the statements of buyers furnished by the appellant whereunder it has been declared by the buyers that no excise duty has been charged from them.
A Two-Member Bench of the Tribunal comprising Ramesh Nair, Member (Judicial) and C L Mahar, Member (Technical) observed that “In view of the above discussion and considering the overall facts and circumstances of this matter, the principles of unjust enrichment in this case is applicable and the appellant has failed to discharge its burden of proving that burden of duty has not been passed on to the customer. We hold that since the incidence of the duty has been passed on to the buyers, therefore, the refund is hit by the principles of unjust enrichment.”
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