2005 (7) TMI 532 - AT - Central Excise

Issues Involved:
1. Refund of duty paid and interest thereon.
2. Burden of proof regarding the passing of duty incidence.
3. Applicability of Section 11B of the Central Excise Act, 1944.
4. Interest rate applicability under Section 11BB.
5. Documentary evidence for refund claims.

Issue-wise Detailed Analysis:

1. Refund of Duty Paid and Interest Thereon:
The Commissioner (Appeals) ordered refunds of Rs. 35,94,234/- and Rs. 9,02,400/- along with interest @12% p.a. The Revenue appealed to set aside these orders. The refunds were based on the Apex Court's decision that the process of separation of Asbestos from Rock does not amount to manufacture, thus not liable to Central Excise Duty. The respondent had initially claimed a refund of Rs. 1,00,19,361.91, which was partially sanctioned.

2. Burden of Proof Regarding the Passing of Duty Incidence:
The core issue was whether the duty burden had been passed on to the buyers. The Commissioner (Appeals) found that the respondents had not passed on the duty burden, thus entitling them to a refund. The Revenue contended that the respondents had not proven that the incidence of duty was borne by them, particularly in transactions with M/s. Eternit Everest India Ltd. and other buyers.

3. Applicability of Section 11B of the Central Excise Act, 1944:
The Revenue argued that allowing refunds without documentary evidence contravenes Section 11B, which addresses unjust enrichment. The Commissioner (Appeals) had scrutinized the documentary evidence, including Chartered Accountant certificates and purchaser letters, concluding that the respondents had borne the duty burden.

4. Interest Rate Applicability Under Section 11BB:
The Revenue contested the 12% interest rate, arguing that Section 11BB, effective from 26-05-1995, specifies different interest rates for different periods, currently at 6% p.a. The Commissioner (Appeals) granted 12% interest based on the Supreme Court's order dated 10-8-2001.

5. Documentary Evidence for Refund Claims:
The respondents produced several documents, including Chartered Accountant certificates and purchaser letters, to prove they had not passed on the duty burden. The Commissioner (Appeals) carefully scrutinized these documents and found them satisfactory.

Judgment:
The Tribunal modified the Commissioner (Appeals)'s order by reducing the refund amount by Rs. 43,328/- due to evidence that this amount was passed on to buyers. Consequently, the refund amount was adjusted to Rs. 35,50,906/-. The Tribunal upheld the interest rate of 12% p.a. as per the Supreme Court's order. The appeal concerning O-I-A No. 38/2004 was rejected, and the refund of Rs. 14,86,706/- was upheld along with the 12% interest. The Tribunal also upheld the sanction of interest on the refund amount of Rs. 22,75,046/- sanctioned earlier by the DC.

Conclusion:
1. In respect of O-I-A No. 37/2004-C.E., Revenue's appeal is partially allowed by restricting the refund to Rs. 35,50,906/-.
2. In respect of O-I-A No. 38/2004, Revenue's appeal is rejected.

Pronounced in open Court on 1-7-2005.

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