Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(CESTAT) 1922

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Ashok Jindal, Judicial Member, K. Anpazhakan, Technical Member
Jk Cement Works – Appellant
Versus
Commissioner Of Cgst And Central Excise – Respondent
EXCISE APPEAL NO. 53894 OF 2018 | EXCISE APPEAL NO. 50097 OF 2019 | EXCISE APPEAL NO. 50696 OF 2020

Advocates:
For the Appellants/Petitioners: B.L. Narasimhan
For the Respondents: Bhagwat Dayal

The doctrine of unjust enrichment is not triggered merely by the accounting treatment of excise duty as an expenditure in financial records. Evidence of actual passing on of duty incidence to customers is required, and a Chartered Accountant's certificate is sufficient to rebut such claims in the absence of contrary evidence.

Headnote:(A) Central Excise Act, 1944 - Sections 11A, 11AB, 11AA and 11BB - Unjust enrichment - Refund of excess duty paid under protest - Merely booking excise duty as revenue expenditure in books of accounts does not imply duty incidence had been passed on to customers - Presumption under Section 12B arises only from 1991 onwards - Certificate issued by Chartered Accountant certifying no passing on of duty burden is valid evidence unless rebutted by contrary documentary evidence. (Paras 2, 6, 7, 8, 9, 10)

(B) Evidence - Burden of proof - Revenue must prove that bar of unjust enrichment is applicable to facts of the case - Mere accounting treatment in profit and loss account as an expense does not establish that the burden of duty was passed to the buyer, especially when goods are sold below cost price. (Paras 7, 8, 9, 10)

Facts of the case:
The appellant sought a refund of excise duty paid under protest during a period when it was setting up a new manufacturing unit. The department initially sanctioned the refunds but later initiated recovery proceedings, alleging that the amount was hit by the bar of unjust enrichment because the appellant had treated the duty as an expense in its profit and loss account. The appellant argued that it incurred heavy losses and could not recover even the production costs, proving the duty was absorbed internally.

Findings of Court:
The Court held that the department’s reliance on the accounting treatment was insufficient to prove unjust enrichment. Since the goods were sold below production cost and the appellant substantiated its claim with an affidavit and a Chartered Accountant's certificate, the burden of proof to demonstrate the passing of duty to customers rested with the revenue, which was not satisfied.

Issues: Whether the mere accounting treatment of excise duty as an expense in the books of accounts constitutes conclusive evidence of passing on the duty burden to customers, thereby triggering the bar of unjust enrichment.

Ratio Decidendi: The court ruled that the doctrine of unjust enrichment is not applicable solely because an entity records duty as an expenditure in its books; actual evidence of passing the burden to the customer is required. A Chartered Accountant’s certificate certifying that the duty was borne by the manufacturer constitutes valid evidence when not rebutted by contrary documentation.

Result: Appeals allowed.

Table of Content
1. historical context of rebate notifications and excess duty payments under protest. (Para 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9)
2. procedural history regarding refund claims, unjust enrichment, and remand proceedings. (Para 10 , 12 , 13)

Appearance:

Present for the Appellant: Shri B.L. Narasimhan, Advocates

Present for the Respondent: Shri Bhagwat Dayal, Authorised Representative

CORAM:

HON'BLE MR. ASHOK JINDAL, MEMBER (JUDICIAL)

HON'BLE MR. K. ANPAZHAKAN, MEMBER (TECHNICAL)

Date of Hearing: 05/05/2026

Date of Decision: 20/05/2026

Final Order No.50957-50959/2026

ASHOK JINDAL:

All the appeals are arising out of common issue, therefore, all are disposed of by a common order.

2. The facts of the case are as under :

1. The Appellant is a unit of J.K. Cement Limited and is engaged in the manufacture of grey cement falling under Chapter 25 of First Schedule to Central Excise Tariff Act.

2. During the FY 1986-87, in order to give impetus to cement manufacturing units in the State of Rajasthan for meeting increased demand of cement, the Central Government, vide Notification No. 36/87-CE dated 1.3.1987 (for short, “Rebate Notification, granted rebate of Excise Duty to cement manufactured in factory which commenced production on or after 1.4.1986. Effectively, a rebate of Rs. 50 per metric tonne (for short “PMT”) was granted to such manufacturers.

3. The Rebate Notification was followed by a Press Note dated 30.4.1987 issued by Ministry of Industry, Department of Industrial Development, which stipulated that the rebate of Excise Duty and reduction of levy quota of cement were meant to suitably compensate the concerned cement units for increase in setting up of cement plants and for growth of cement industry.

4. Further, Cement Control Order, 1967 specified the retention price (ex-factory price) of cement in Clause 8, which when read with Explanation I(ii) thereof, entitled the manufacturers to collect Excise Duty including the exemption or rebate in Excise Duty of Rs. 50 PMT granted by Central Government vide the Rebate Notification.

5. In view of the above, the Appellant (which at the relevant time was a unit of J.K. Synthetics Ltd.) applied for and was granted a license dated 3.11.1987 for substantial expansion of installed capacity of its existing cement unit at Nimbahera, Rajasthan. In furtherance to the above, on 17.12.1987, the Appellant set up a new manufacturing unit adjacent to its old plant in the name of „New J.K. Cement Works‟, and commenced manufacturing operations therefrom. Consequently, the said manufacturing unit became entitled to avail incentives and rebate of Excise Duty granted under the Rebate Notification.

6. The Appellant, vide letters dated 17.12.1987 and 27.1.1988, intimated the Ld. Jurisdictional Assistant Commissioner, Central Excise and Customs, regarding its claim to avail the benefit of the Rebate Notification as a new manufacturing unit. Further, vide letter dated 13.4.1988 the Appellant also intimated that it shall be making clearances on payment of Excise Duty at a higher rate “under protest”, without availing benefit of the Rebate Notification, till the time of approval of classification list by the department.

7. Accordingly, the Appellant paid excess Excise Duty under protest amounting to Rs. 1,85,93,463 for the period from 1.5.1988 to 31.10.1988 and Rs. 20,29,894 for the period from 1.11.1988 to 21.11.1988.

8. On 21.11.1988, the department approved a classification list separately for New J.K. Cement Works, allowing rebate of Excise Duty to the Appellant in terms ofthe Rebate Notification. Hence, w.e.f. 22.11.1988, the Appellant made payment of the Excise Duty to the Government after reduction of Rs. 50 PMT in terms of the Rebate Notification.

9. The factual background leading to the present disputes is summarised as under:

Date	E/53894/2018 Refund (Pd. 1.5.1988 to 31.10.1988)	E/50097/19 Refund (Pd. 1.11.1988 to 21.11.1988)	E/50696/2020 Recovery proceedings of refund sanctioned
4.1.1989 and

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2026 Supreme(Online)(CESTAT) 1922

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNALAshok Jindal, Judicial Member, K. Anpazhakan, Technical MemberJk Cement Works – AppellantVersusCommissioner Of Cgst And Central Excise – RespondentEXCISE APPEAL NO. 53894 OF 2018 | EXCISE APPEAL NO. 50097 OF 2019 | EXCISE APPEAL NO. 50696 OF 2020