2004 (11) TMI 405 - AT - Central Excise

Summary

Issues: Refund of duty paid on yarn used in production of exempted goods, compliance with Notification No. 31/2001, unjust enrichment, passing on the incidence of duty, stay application.

Analysis:
1. Refund of duty on yarn: The Commissioner allowed the refund of duty paid on yarn used in the production of exempted goods based on compliance with Notification No. 31/2001. The Commissioner held that since no duty is payable on the yarn as per the notification, the duty paid is refundable.

2. Compliance with Notification: The Revenue argued that the Commissioner erred in allowing the refund, stating that the company reversed the credit on inputs after goods were cleared, violating the conditions of Notification No. 31/2001. The Revenue contended that procedural requirements must be strictly satisfied, and the refund should not have been granted while the appeal on the eligibility of another notification was pending.

3. Unjust Enrichment: The Revenue claimed that the balance sheet and Chartered Accountant Certificate were not sufficient evidence to prove that the duty incidence was not passed on. The Revenue argued that the company's losses did not establish non-passing of duty incidence to buyers.

4. Stay Application: The Tribunal found that the issue required deeper examination, stating that the company's losses and price stability were not conclusive evidence of non-passing of duty incidence. The Tribunal held that the Revenue had made a prima facie case for a stay of the Commissioner's order.

5. Decision: The Tribunal granted the stay application, allowing the Revenue's request during the appeal's pendency. The order of the Commissioner was stayed based on the prima facie case made by the Revenue regarding the refund of duty paid on yarn used in the production of exempted goods.