Akil Abdul Hamid Kureshi, J.

1. The appeal is preferred by the Commissioner, Central Excise & Customs, Vadodara challenging the judgment of the 2005 (189) ELT 425 . [LQ/CESTAT/2005/2109] While admitting the appeal on 31st March, 2006, the following substantial questions of law were framed:-

(A) Whether, on the facts and in the circumstances of the case, the Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench at Mumbai has substantially erred in law in holding that the burden of duty had not been passed on by the respondent to the dealers/buyers

(B) Whether, on the facts and in the circumstances of the case, the Tribunal has substantially erred in law in holding that principle of "unjust enrichment" is not applicable to the facts of the case because the respondent had filed an affidavit stating that burden of duty had not been passed on to its dealers/customers by maintaining uniformity of price

(C) Whether, on the facts and in the circumstances of the case, the Tribunal has substantially erred in law in ignoring the ratio laid down by the Supreme Court in Commissioner of Central Excise, Mumbai-II Vs. Allied Photographics India Ltd., , wherein it has been held that uniformity of price before and after assessment does not lead to an inevitable conclusion that duty has not been passed on to the buyers

Briefly stated, the facts are as under:--

2.1 The respondent, a company registered under the Companies Act, is engaged in manufacture and sale of Pan-masala/Ghutka. They had been clearing such goods under Heading 2106.00 by paying excise duty accordingly. The Central Excise authorities at Vadodara, however, disputed the said classification and vide communication dated 12th December, 2000, directed the respondent to pay duty under the Heading 2404.90. It is not disputed that under the said Heading 2404.90, the basic excise duty leviable was at a higher rate of 16%. There would be corresponding increase in other duties viz., special excise duty and additional excise duty on the basis of such higher excise duty. Under the insistence of the Excise Department, therefore, the assessee had under protest paid duty at the higher rate for the months of January and February, 2011. With effect from 1st March, 2001, tariff rate was prescribed which put an end to this controversy. On 13th January, 2001, the respondent filed refund claim of Rs. 2,55,81,066/- before the Deputy Commissioner of Central Excise, Vadodara. The Deputy Commissioner, however, issued a show cause notice dated 31st March, 2001 calling upon the assessee why such refund claim should not be rejected on the ground of unjust enrichment. In such notice, he noted that the assessee had produced a comparison chart establishing the fact that incidence of duty was borne by the assessee and was not passed on to the customers. He, however, noted that in the invoices, the assessee had separately shown the Central Excise duties, which would mean that such duties were recovered from the customers. He was therefore of the prima facie opinion that if the refund claim is granted, the same would amount to unjust enrichment.

2.2 The assessee appeared before the Deputy Commissioner and pointed out that the duty was paid under protest, before and after the increase in the excise duty at the insistence of the Department, the price of the goods had remained the same, the duty element was therefore borne by the assessee. An affidavit of the officer of the company was also filed declaring that the duty burden was not passed on to the customers.

2.3 Deputy Commissioner, however, was not impressed. In his order dated 23rd April, 2002, he rejected the refund application wherein he held and observed as under:--

Findings and discussion:--

I have carefully gone through the case records, grounds of refund claim and submissions made by the assessee during the personal hearing. I do not find merit in the submission made by the assessee that they have not changed the price structure despite the fact that price structure was change by them as evident from the invoices issued prior to change of duty structure and post-change of duty structure. II is beyond any dispute that in invoices they have shown duty separately and duty was charged accordingly, which inter alia makes well evident that the incident of duty paid as excise duty has been passed on to the customer and it is not refundable to the assessee. The concept of passing on of the incidence of duty squarely arise in this case as burden of duty paid on final products were directly passed on to the buyer which gives ample space for application of the bar of unjust enrichment. The relied upon case laws are also not relevant in the present case. This is a fact that the assessee recovered the Central Excise duties as mentioned in the invoices raised by the assessee from their respective customers and they have failed to produce the evidences that if the refund claim is to be sanctioned then it will not enrich them unjustly as required to be satisfied u/s 11B of the Central Excise Act, 1944 under clause of unjust enrichment. For the above reasons, the refund claim requires to be credited to the Consumer Welfare Fund established u/s 12C of the Central Excise Act, 1944 even if considerable.

2. The assessee approached the Commissioner (Appeals) by filing Departmental appeal. Before the Appellate Commissioner, assessee placed written submissions and reiterated the contentions raised before the Deputy Commissioner. It was pointed out that the transaction value had remained the same, despite increase in the duty. The assessee was of the opinion that the matter was mis-interpreted by the Department and the issue would be finalized on the basis of merits shortly. Even the Parliament was in seisin of the matter. It was under these circumstances that the assessee did not increase the price structure of the product, even after the Department required the assessee to change classification. It was, therefore, that there was no change in the total value of the goods sold during the months of January and February, 2001, as compared to the price of the same product charged during the months immediately preceding the said period.

2.1 The Commissioner (Appeals), however, did not accept such explanation. He rejected the assessees appeal and confirmed that of the Dy. Commissioner, by his order dated 28th April, 2003. He observed as under:--

I have carefully gone through the case records and considered the submissions made in the appeal memorandum as well as made during the course of personal hearing. I have also gone through the case laws relied upon by the appellant.

As regards refund of differential duty amounting to Rs. 2,50,01,941/- paid during the period from January to February, 2001 after re-classification of the goods, the appellant contended that there was no change in composite price and composite price remained the same before and after reclassification of the goods, however, I find from the records that duty was separately shown in invoices and accordingly duty has been collected from the customers. Therefore, mere argument that the price structure was not revised or no change in the composite price has taken place will not be sufficient to prove that the excess incidence of duty was not passed on to customer but absorbed by themselves in their pricing mechanism inasmuch as invoices issued by the appellants do not show composite price and duty is indicated separately. The appellant have not produced any documentary evidence to prove that differential duty has been absorbed by them in their pricing mechanism by lowering the basic sale price. The reduced price structure can be due to any other reason like reduction in profit margin or modification of cost structure. This does not establish that the burden of excess differential duty paid to the department was absorbed by them. The ratio of the case laws relied upon by the appellant is not applicable to the appellants case. Since the facts of the case referred to in the aforesaid judgment/decision are different than the appellants pertaining to the material period do not show composite price and the duty has been shown separately. In view of above, the amount of refund claim in respect of differential duty is hit by principle of unjust enrichment and has rightly been held so by the original authority.

3. Assessee carried the matter in further appeal before the Tribunal. The Tribunal by the impugned judgment allowed the appeal. Tribunal compared the invoices of the disputed period as well as the period immediately preceding such period and came to the conclusion that the price had remained exactly the same. The Tribunal referred to various decisions of the Apex Court; including in case of Mafatlal Industries Ltd. and Others Vs. Union of India (UOI) and Others, . The Tribunal also referred to a decision of the Supreme Court in case of Assistant Collector of Customs and Others Vs. Anam Electrical Manufacturing Co. and Others, and noted that in terms of the said judgment, the assessee had filed an affidavit stating that the company has not passed on the burden of duty to any one else. On the basis of such combined factors, the Tribunal came to the conclusion that the assessees refund claim was not hit by the principle of unjust enrichment.

4. Revenue has thereupon filed this appeal. Learned counsel Shri Ravani for the Department vehemently contended that - (a) the Deputy Commissioner as well as Commissioner had correctly held that the assessee failed to establish that the incidence of additional duty was not passed on to the consumers. The Tribunal, therefore, erred in reversing such findings; (b) the assessee had shown higher rate of duty in the invoices, clearly indicating that the said duty was charged from the customers; and (c) merely because before and after the increase in the duty, the price of the goods remained constant would not by itself mean that the duty element was not passed on to the consumers.

5.1 Counsel placed heavy reliance on the decision of Apex Court rendered in Mafatlal Industries Limited (supra) where it was held that unjust enrichment is the salutary principle and should be applied in all cases of refund. Counsel also relied on the decision in case of Commissioner of Central Excise, Mumbai-II Vs. Allied Photographics India Ltd., to contend that merely because the price structure remained the same would not be conclusive that the burden of duty was not passed on to the consumers.

6. On the other hand, learned counsel Shri Sujay Kantawala for the respondent assessee opposed the appeal contending that - (a) the Tribunal has examined the evidence in detail and come to a factual finding that the burden of duty was not passed on by the assessee to the consumers; (b) the assessee had filed an affidavit of the responsible officer of the company making necessary declaration that such duty was not passed on in terms of Supreme Court decision in case of Anam Electrical Manufacturing Company (supra); and (c) it was only in Vadodara Commissionerate that this question had cropped up. If the assessee had not reduced the sale price by absorbing the burden of additional duty, its distributors could easily have purchased the same goods from other sources; including other manufacturers or assessees own outlets located outside Vadodara.

7. The issues before us are not very complex. A short-question is did the Tribunal commit an error in law in allowing assessees refund claim holding that the principle of unjust enrichment would not apply In order to decide such question, we may recall that the principal objections of the Department were that the sale invoice indicate higher rate of duty which in turn would imply that the assessee charged such duty to its consumers. The second ground for rejecting the refund claim was that mere constant sale value of the goods would not establish non-passing of the duty burden to the consumers.

8. In our opinion, both the objections are unsustainable. Admittedly, till January, 2001, the assessee was paying excise duty at a lower rate. For the months of January and February, 2001, the assessee was forced to clear the goods under Heading 2404.90 at a higher rate. This was done under protest. The assessee also established that the sale price of the goods, despite this change in the duty rate that the assessee charged from the consumers, remained the same. This aspect has been gone into by the Tribunal at a considerable length. In the impugned judgment, the Tribunal compared the different invoices for the period between January-February, 2001 and immediately before that. The Tribunal found that despite assessee paying considerably higher rate of excise duly and correspondingly higher duties of special excise and additional excise duties, the price inclusive of taxes remained the same. This could be seen from one such comparative chart that the Tribunal drew in its impugned judgment, which reads thus-

9. In fact, this aspect the assessee established to the satisfaction of the Deputy Commissioner and the Commissioner also. Even these authorities did not dispute that despite increase in the Excise duty and corresponding increase in the additional duties, the goods were sold by the assessee to the consumers exactly at the same price as were being sold prior to January, 2001.

10. It is true, as held by the Supreme Court in case of Allied Photographics India Limited (supra), this by itself would not be conclusive that the additional burden of duty was not passed on to the consumers by the assessee. Perhaps when seen in isolation, in a given case, it may still be open for the Department to apply the principle of unjust enrichment if it is found that the sale price of the goods remained the same before and after collection of higher rate of duty, due to some other reasons such as reduction in the price of raw materials or some factors completely unrelated to the assessee absorbing the impact of higher rate of duty. In the present case, however, as noted by the Tribunal and as pointed out to us during the course of this appeal from the record, there were several attending facts and circumstances which permitted the Tribunal to hold that the assessee had discharged the burden of establishing that this was not a case of unjust enrichment.

11. In addition to firmly establishing that in all cases of sales during January and February, 2001, the price of goods remained the same as was charged during the period immediately preceding the said months, despite the Department insisting on collecting higher rate of duties, the assessee had also filed affidavit of the responsible officer of the company that the burden of duty was not passed on to the consumers. It was also pointed out that the issue of higher rate of tax had cropped up only in Vadodara Commissionerate. The same was sorted out very shortly by the legislative changes. The assessee was confident that the objection of the Department was simply not sustainable and that the assessee would surely succeed. It was because of this that the duty was paid under protest but not collected from the consumers. Most significantly, as correctly pointed out by the learned counsel for the respondent, if such issue was peculiar only to Vadodara Commissionerate, the existing distributors of the assessee would not continue to lift the goods from the assessee if sold at a considerably higher price than available from other manufacturers or even other units of the assessee situated outside the jurisdiction of the Vadodara Commissionerate. This was a strong indication that the assessee had no choice but to absorb the blow of additional duty even from the stand point of commercial expediency.

11.1 Mere fact that the said invoices indicated Excise duty @ 16% under the Heading 2404.90 cannot be fatal to the assessees claim. Before the Tribunal, the assessee had pointed out that -

(ii) in terms of the Central Excise Rules, no excisable goods could be cleared from a factory, except under an invoice containing all the particulars prescribed therein. Therefore, it was compulsory for the appellants to prepare an invoice and show the rate of duty payable an discharged through under protest the appellants were bound to submit a monthly return under Rule 173G(3) with reference to the invoices issued. The appellants had also had to assess the duty due in the return in terms of Rule 173F.

In view of all these compulsions, appellant had no other way than showing the details in the invoices for the purpose of compliance under the provisions of Central Excise Law. Appellants had to show the details of the duty in the invoices during the material time. In other words, the appellants maintained the same commodity price in market during the material time, which existed immediately before the change. In this change over, the appellants adjustments in the price structure was a desire to maintain price in the market to be unchanged. And they could not complete with their own same products being cleared from factories in other jurisdiction by recovery the excess duties, discharged at Vadodara factory from their consumers. By keeping the buyers purchased price same, they have established that they have not passed on the excess duty collected to the buyers. They managed to absorb the incidence of increase in duty by changing the structure, as follows as submitted. That was the only legal way inasmuch as they could not show duty payable under Chapter 21 and paid under Chapter 24, in each of the invoices issued for removal of goods.

11.2 To this important issue raised by the assessee, counsel for the Revenue could raise no legal dispute. As pointed out by the assessee and as accepted by the Tribunal and not controverted by the learned counsel for the Revenue, when the assessee even though under compulsion was clearing the goods under certain sub-heading of Excise Tariff and which notify a certain rate of Excise duty, he had to declare such clearance and rate of duty in the invoices failing which, there would be a mis-match between what the assessee was depositing with the Department by way of Excise duty and additional duties and what would be indicated in the invoices. If that be so, simply because the invoice of the period in question indicated excise duty at the rate of 16% would not in any manner mean that the assessee passed on such duty in its entirety to the consumer. Answer to this crucial question had to be found from other sources and evidence.

11.3 In view of over-whelming evidence on record suggesting that the assessee had not passed burden of additional duty to the consumers, the Tribunal correctly reversed the decision of the Central Excise authorities.

12. Before closing, two issues remain to be tackled. Firstly, counsel for the Revenue was correct in pointing out that the Tribunal in the impugned judgment has referred to a portion of the decision rendered by the Supreme Court in case of Mafatlal Industries Limited (supra), which was a minority view. Despite such inadvertent error on the part of the Tribunal, in our opinion in the ultimate analysis, the Tribunal did not commit any error.

12.1 The second issue is with respect to applicability of the judgment of the Supreme Court in case of Allied Photographies India Limited (supra). The said judgment was rendered in the backdrop of a reference made to a Larger Bench in view of conflicting decisions of the Supreme Court on the issue of applicability of the principle of unjust enrichment. The question was whether in a claim for refund, after final assessment, is governed by Section 11B of the Central Excise Act, 1944. The Court held that even in such a case, it would be governed by provisions of Section 11B of the Central Excise Act and the burden would be on the assessee to establish that there was no unjust enrichment. Having so held, the Supreme Court also examined whether in the case on hand, the claimant was entitled to refund or was the claim hit by unjust enrichment. It was a peculiar case where the manufacturer had conceded that the burden of additional duty was passed on to the distributors and that therefore, the refund claim of the manufacturer was hit by the principle of unjust enrichment. It was in this background that the distributors filed refund claims contending that at least their claim was not hit by the principle of unjust enrichment. In this context, the Supreme Court did examine various aspects emerging from the record and held that uniformity in price before and after the assessment does not lead to an inevitable conclusion that incidence of duty has not been passed on to buyer, as such uniformity may be due to various factors.

13. In our opinion, the decision of the Supreme Court in case of Allied Photographics India Limited (supra) and the ratio laid down therein would certainly have application and bearing on the case on hand. However, even while applying the principle propounded in the said decision and noted above, in the present case, we find that considering additional material on record, the assessee, as held by the Tribunal, had succeeded in establishing that the burden of higher duty was not passed on to the consumers. The Deputy Commissioner and Commissioner both simply brushed aside the evidence on record by holding that merely because the price structure has not changed, the burden on the assessee cannot be stated to have been discharged. When we find that in addition to such constant price structure there were other factors having a bearing on the issue, the said authorities could not have rejected the refund claim. The assessee having discharged the burden of establishing the necessary requirement, if the Departmental authorities desired to examine the issue from any other angle or required additional material to satisfy whether the uniformity in the price structure is attributable solely to the assessee absorbing the additional burden of duty or on some other fortuitous circumstances independent of the question of the assessee absorbing such burden, the authority could and ought to have made further inquiries with the assessee.

14. In the result, Questions (A) & (B) are answered in the negative i.e., in favour of the respondent-assessee. Question (C) is answered in a manner that the decision of the Supreme Court in case of Allied Photographics India Limited (supra) does have application to the case on hand, in view of other additional facts and circumstances, the Tribunal committed no error in allowing the assessees appeal. Revenues appeal is therefore dismissed. At this stage, learned counsel for the Revenue prayed that this judgment be stayed for a reasonable period with a view to file a further appeal. It was pointed out that during pendency of the appeal, the High Court had granted stay against implementation of the Tribunals judgment. Learned counsel for the respondent at this stage stated that the respondent would not execute the judgment of the Tribunal till 30th April, 2014. On such basis, we see no reason to grant the said prayer of staying this judgment.