Hindustan Coca Cola Did Not Recover Excise Duty From Their Customers, Is Not Hit By The Bar Of Unjust Enrichment: CESTAT

The Mumbai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that Hindustan Coca-Cola did not recover excise duty from their customers and is not hit by the bar of unjust enrichment.

The bench of Ajay Sharma (Judicial Member) has observed that when duty has been paid during the investigation at the insistence of the department post-clearance of the goods, the provisions of unjust enrichment will not apply.

The appellant/assessee is in the business of manufacturing mineral water and aerated water. The finished goods were packed and sold in glass bottles and crates, and during handling, some bottles also got damaged. The scrap, i.e., damaged bottles, etc., was disposed of by the appellants. Empty packing material received in plastic containers and bags was also disposed of by the appellants.

Since the department was of the view that duty was payable on such scrap cleared from the factory, as per their direction, the appellant started clearing waste and scrap on payment of duty w.e.f. December 2001 and also paid excise duty on past clearance of waste and scrap up to November 2001 ‘under protest’.

Ultimately, the issue regarding the chargeability of the scrap generated during handling was settled by this Tribunal in favour of the appellant by observing that duty would not be chargeable as the scrap was a residual material generated during handling and was not the result of any manufacturing activity.

After getting the order, the appellant filed a refund claim for the duty paid by them under protest. The refund involved herein is limited to the period from February 2000 to December 2001, amounting to Rs. 6,02,400.

The commissioner rejected the appeal filed by the appellant by recording a finding that the Chartered Accountant’s certificate has not established that excise duty elements have not been included in the value of the commercial invoices but was born by the appellant.

The authorities below granted the refund claim but credited it to the Consumer Welfare Fund on the ground of unjust enrichment.

The CESTAT held that the Commissioner had only to see whether the Chartered Accountant’s certificate endorses the claim of the appellant that they have not charged the duty from their customers to whom they have already issued commercial invoices.

The tribunal found that the certificate explicitly supported the stand of the appellant, as it mentioned by stating that ‘assessee has not received any amount over and above the amount mentioned in the respective commercial invoices issued by them during the period February 2000 to November 12, 2001.’

Counsel For Appellant: Jitendra Motwani

Counsel For Respondent: P.K. Acharya

Case Title: Hindustan Coca Cola Beverages Pvt. Ltd. Versus Commissioner of CGST & Central Excise, Bhiwandi

Case No.: Excise Appeal No. 88191 of 2018

Click Here To Read The Order