2015 (5) TMI 1145 - AT - Central Excise

Refund of excess excise duty paid - case of Revenue is that verification of duty paid documents at the consignee s end is required to be done under Rules 3 and 4 of the Cenvat Credit Rules - Held that - Claim of refund on account of excess payment of duty can only be verified from the Cenvat records maintained at the consignee s end. Thus findings in the impugned order regarding admissibility of the refund claim subject to non-availment of Cenvat credit at the consignee s end is in conformity with law - it is observed that the verification of Cenvat credit records will reveal the position whether the duty burden has been passed on or not. Therefore the original authority is directed to verify the relevant records to arrive at the conclusion whether the excess amount of excise duty paid by the respondent has been taken by the recipient as Cenvat credit - Appeal allowed by wya of remand.

Issues: Appeal against order rejecting refund claim for excess central excise duty payment due to SAP system error. Consideration of verification of Cenvat credit records at consignee's end and doctrine of unjust enrichment.

Analysis:
1. Issue of Excess Central Excise Duty Payment: The respondent, a manufacturer of iron and steel products, made excess payment of central excise duty due to a system error in their SAP accounting system, resulting in invoices showing double the duty percentage. The respondent applied for a refund of the excess duty paid on nine invoices, which was initially rejected by the adjudicating authority but later held eligible by the Commissioner (Appeals), subject to verification of non-availment of Cenvat credit at the consignee's end.

2. Verification of Cenvat Credit Records: The Revenue appealed against the Commissioner's order, arguing that verification of duty paid documents at the consignee's end is essential under the Cenvat Credit Rules. The Tribunal emphasized the importance of verifying Cenvat records at the consignee's end to determine if the excess duty amount has been passed on as Cenvat credit. The Tribunal directed the original authority to conduct this verification to ascertain if the recipient had availed credit on the excess duty paid by the respondent, which would impact the application of the doctrine of unjust enrichment.

3. Doctrine of Unjust Enrichment: The respondent contended that the Commissioner's order adequately addressed the doctrine of unjust enrichment, stating that the aspect had been properly considered and dealt with in the impugned order. The Tribunal agreed that verification of Cenvat credit records is crucial to determine if the duty burden has been passed on to the recipient. If it is found that the recipient did not avail credit on the excess duty paid, the doctrine of unjust enrichment would not apply, making the respondent eligible for the refund.

4. Conclusion: The Tribunal disposed of the appeal, upholding the Commissioner's decision on the admissibility of the refund claim, subject to verification of Cenvat credit records at the consignee's end. The Tribunal highlighted the importance of verifying whether the recipient had availed credit on the excess duty paid to determine the applicability of the doctrine of unjust enrichment. Both the appeal and the cross-appeal were disposed of accordingly.

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