2004 (4) TMI 330 - AT - Central Excise

Summary

Issues: Refund of duty claimed by the appellants

The judgment by the Appellate Tribunal CESTAT, New Delhi, involved the issue of refund of duty claimed by the appellants. The appellants had issued invoices for various charges to their customers but later filed a refund claim stating that the invoices had been cancelled, and credit notes were issued for unclaimed amounts. The Revenue contended that the duty incidence had been passed on to the customers, thus denying the refund. However, the Tribunal held that since the charges were not recovered from the customers and the original invoices were cancelled, the duty refund was justified.

Analysis:

The Tribunal considered the facts presented, where the appellants issued invoices for charges but later cancelled them, issuing credit notes instead. The Revenue argued that the duty incidence had been passed on to the customers, thus opposing the refund claim. However, the Tribunal disagreed with this argument, stating that the appellants were entitled to the refund as they did not recover the charges from the customers. The Tribunal referenced the case law of Sangam Processors (Bhilwara) and Another v. CCE, highlighting that passing on duty at the time of goods clearance would not change with subsequent credit notes. Nonetheless, in this case, as the charges were not recovered from the customers and the invoices were cancelled, the duty refund was deemed appropriate.

The Tribunal emphasized that the appellants had issued invoices to customers for various charges but later decided not to claim those charges, leading to the cancellation of the invoices and issuance of credit notes. Since the charges were not recovered from the customers, the Tribunal held that the duty incidence had not been passed on to the customers. Citing the Sangam Processors case, the Tribunal clarified that the situation in the present case differed, as the original invoices were not passed on to the customers. Consequently, the Tribunal ruled in favor of the appellants, allowing the appeal and granting them the refund of duty paid under the cancelled invoices.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal of the appellants, providing them with consequential relief as permissible under the law. The decision highlighted that since the charges were not recovered from the customers and the duty incidence was not passed on, the appellants were entitled to the refund of duty paid under the cancelled invoices.