2010 (8) TMI 300 - HC - Central Excise

Refund unjust enrichment price declared at the time of clearance from factory higher than price at which goods sold at depot revenue not succeed in this appeal under Section 35G of the Act where element of excise duty is not separately mentioned in invoice - substantial question of law under Section 35G of the Central Excise Act - appeals are dismissed. Under clause (d) of the proviso to sub-section (2) of Section 11B of the Act, an assessee can claim payment of refundable amount to him only when he proves that the incidence of duty was not passed on to any other person. In the absence of any such proof, presumption that the incidence of duty has been passed on to the buyer as adumbrated in Section 12B of the Act is attracted. In this case, the adjudicating authority, appellate authority and the learned Tribunal have consistently found that APPL has proved that the incidence of duty was not passed on to the buyers at the time of sale at discount price from the depots - there was no unjust enrichment.

Issues Involved:
1. Entitlement to refund claims by APPL.
2. Time-barred claims and eligibility of refund.
3. Passing of the incidence of duty to the buyer.
4. Proper documentation and correlation between factory and depot invoices.
5. Applicability of Section 11B and Section 12B of the Central Excise Act, 1944.
6. Crediting of refundable amount to Consumer Welfare Fund (CWF).

Detailed Analysis:

1. Entitlement to Refund Claims by APPL:
APPL, a manufacturer of paper and paper boards, filed refund claims for the period from May 1996 to November 1999. The claims were based on the assertion that goods sold through depots were at lower prices than the assessment value at which duty was paid at the factory gate. The Assistant Commissioner of Central Excise, Rajahmundry, allowed these claims, which were later contested by the department at various appellate levels, culminating in the rejection of the department's appeals by CESTAT.

2. Time-Barred Claims and Eligibility of Refund:
The original authority adjudicated that time-barred claims were ineligible and issued a show cause notice to limit the refund claims excluding ineligible items. The Assistant Commissioner passed orders for refund of eligible amounts while disallowing the ineligible parts. The appellate processes involved multiple reviews and remands, with the appellate Commissioner ultimately rejecting the refund claim for a minor amount while accepting the rest.

3. Passing of the Incidence of Duty to the Buyer:
The department contended that APPL did not bifurcate the excise duty elements in depot sale invoices, suggesting that the incidence of duty was passed on to the buyer. They argued that under Section 11B and Section 12B of the Act, a presumption must be drawn that the manufacturer passed the duty incidence to the customer. However, the court found that APPL had proven that they bore the burden of the duty themselves, as evidenced by the scrutiny of invoices by the adjudicating authority and appellate bodies.

4. Proper Documentation and Correlation Between Factory and Depot Invoices:
The Assistant Commissioner and appellate authorities scrutinized the invoices and found that wherever APPL failed to produce evidence for exact correlation between depot and factory invoices, claims were disallowed. The consistent findings by the adjudicating authority, appellate authority, and CESTAT indicated that APPL had not passed on the duty incidence to the buyers, thus entitling them to the refund.

5. Applicability of Section 11B and Section 12B of the Central Excise Act, 1944:
Section 11B(2) of the Act stipulates that refundable amounts should be credited to the CWF unless the manufacturer proves that the incidence of duty was not passed on to any other person. The court upheld that APPL had met this burden of proof, as the adjudicating and appellate authorities found no evidence of duty incidence being passed on to buyers.

6. Crediting of Refundable Amount to Consumer Welfare Fund (CWF):
The department argued that the refundable amount should be credited to the CWF under Section 12C of the Act. However, the court rejected this argument, emphasizing that APPL had proven they did not pass on the duty incidence, thus entitling them to the refund directly.

Conclusion:
The appeals were dismissed as they did not involve any substantial question of law under Section 35G of the Central Excise Act. The court upheld the findings of the adjudicating and appellate authorities, confirming that APPL was entitled to the refund claims and had not unjustly enriched themselves.

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