2011 (2) TMI 1358 - AT - Central Excise

Summary

Issues:
Refund of excess excise duty paid, Burden of duty passed on to customers, Validity of issuing credit notes, Interpretation of relevant case laws.

Analysis:
1. Refund of Excess Excise Duty Paid:
The case involved a dispute regarding the refund of excess excise duty paid by the respondent due to a reduction in the duty rate. The original authority sanctioned the refund, which the Commissioner (Appeals) modified to a cash refund to the respondents. The department appealed against this decision.

2. Burden of Duty Passed on to Customers:
The key issue was whether the burden of excess duty paid by the respondents had been passed on to their customers. The department argued that even though credit notes were issued later, the burden had already been shifted to the customers through the initial invoices indicating the higher duty rate.

3. Validity of Issuing Credit Notes:
The Commissioner (Appeals) held that the issuance of credit notes by the respondents indicated that the burden of excess duty had not been passed on to any other person. This was a crucial point in determining the eligibility for a cash refund as opposed to depositing the amount in the Consumer Welfare Fund.

4. Interpretation of Relevant Case Laws:
Both sides relied on various case laws to support their arguments. The department cited cases where the duty burden was considered to have been passed on despite subsequent actions like issuing credit notes. On the other hand, the respondents relied on judgments emphasizing the importance of the transactions between the manufacturer and the first stage dealers in determining the burden of duty.

5. Final Decision:
After considering the submissions and case laws, the Tribunal concluded that the burden of duty had been passed on to the customers by the respondents. Therefore, the order of the Commissioner (Appeals) granting a cash refund was set aside, and the original authority's decision to deposit the refund in the Consumer Welfare Fund was restored. The department's appeal was allowed based on this analysis.