2003 (12) TMI 410 - AT - Central Excise

Summary

Issues:
1. Refund claim based on deduction of transportation cost from sale price.
2. Compliance with Section 11B of the Act for refund.
3. Application of amended Section 11B retrospectively.
4. Validity of recovery of refunded amount.

Analysis:
1. The case involved a refund claim by the assessee for the duty paid on welding electrodes after deducting transportation costs from the sale price. The Commissioner (Appeals) allowed the deduction, leading to the refund claim. However, the Assistant Collector rejected the claim due to lack of evidence of actual duty payment. Subsequently, the Gujarat High Court directed the Assistant Collector to decide on the refund, which was sanctioned in September 1991. The issue arose when a notice for recovery was issued based on non-compliance with Section 11B(2) of the Act, which was challenged by the assessee.

2. The Department contended that the refund claim was still pending when Section 11B was amended in 1991, citing the Supreme Court's judgment in Union of India v. Jain Spinners Ltd. The Tribunal noted that the refund order was issued before the amendment, and the assessee had credited the refunded amount to its Modvat account. However, as the notice for recovery was issued within the prescribed period, the Tribunal upheld the Assistant Commissioner's decision to apply Section 11B(2) for denial of refund.

3. In considering the retrospective application of Section 11B, the Tribunal referred to the Supreme Court's ruling in Mafatlal Industries v. Union of India. The Tribunal emphasized that if refund proceedings had not been finally terminated before the amendment, the provisions of amended Section 11B would apply. Since the notice for recovery was issued within the stipulated period, the Tribunal concluded that the refund proceedings were not closed, justifying the Assistant Commissioner's decision to deny the refund based on non-compliance with Section 11B(2).

4. Consequently, the Tribunal allowed the appeal by the Department, setting aside the earlier order and affirming the Assistant Commissioner's decision to recover the refunded amount from the assessee and deposit it in the Consumer Welfare Fund. The Tribunal found the denial of refund justified due to non-compliance with Section 11B(2) and the absence of evidence that the duty incidence had not been passed on.