2010 (11) TMI 300 - AT - Central Excise

Refund - Limitation - The assessee at any stage asked for provisional assessment under Rule 9B of the Central Excise Rules 1944 nor that any permission for such assessment was given by the jurisdictional Assistant Commissioner - The decision of the learned Commissioner (Appeals) in relation to the refund claims beyond six months from the relevant dates cannot be faulted - The Assessee s appeal is therefore dismissed. Refund - Unjust enrichment - Proof - The goods in question were stock-transferred from factory to depot and subsequently cleared from the depot to the buyers - At the time of clearance of the goods at the factory gate duty of excise was paid on assessable value which was determined after deduction of certain amounts of discount allowed to the ultimate buyers - When the goods were cleared to those buyers from the depot a higher discount was allowed which was reflected in the invoices issued to them. However these invoices did not separately indicate the amount of duty collected from the buyers - The burden was all the more for the assessee to establish that the burden of duty had not been passed on to the buyers - The learned counsel has submitted that (i)the buyers were also aware of the higher discount before the clearance of the goods from the depot (ii)such discount was actually given to the buyers by way of recovery of a part of the price by the assessee from the buyers (iii)the assessee issued credit notes to their buyers for taking back the differential duty burden - The assessee has not challenged the finding of the lower appellate authority that there is no evidence of any such credit notes have been issued by them to their buyers for taking back any duty burden - Thus refund claims are barred by unjust enrichment.

Summary

Issues Involved:
1. Time-barred refund claims under Section 11B of the Central Excise Act.
2. Unjust enrichment in the context of refund claims.
3. Admissibility of refund claims on merits.
4. Entitlement to interest on refunded amounts.

Issue-wise Detailed Analysis:

1. Time-barred Refund Claims:

The first issue addressed was whether the refund claims for the months of October to December 1996, amounting to Rs. 70,02,051/-, were barred by limitation under Section 11B of the Central Excise Act. The Assistant Commissioner and the Commissioner (Appeals) had both rejected these claims as time-barred, reckoning the period of limitation from the date of payment of duty. The assessee contended that the assessments were provisional, thus the limitation period did not apply. However, the Tribunal found that the assessee failed to establish that the assessments were provisional, as there was no evidence of any request or permission for provisional assessment under Rule 9B of the Central Excise Rules, 1944. Consequently, the Tribunal upheld the decision that these refund claims were time-barred and dismissed the assessee's appeal.

2. Unjust Enrichment:

The second issue involved the Revenue's appeal against the grant of a refund of Rs. 1,07,98,905/- for the period January to June 1997. The Revenue contended that the refund was barred by unjust enrichment, arguing that the duty incidence was passed on to the buyers at the time of clearance of goods, and subsequent actions like issuing credit notes did not alter this fact. The Tribunal referred to the facts, noting that the goods were stock-transferred from the factory to the depot and then sold to buyers with a higher discount reflected in the invoices. However, the invoices did not separately indicate the duty amount. The Tribunal cited precedents, including the Larger Bench decision in S. Kumars Ltd., which held that issuing credit notes post-clearance did not suffice to overcome the bar of unjust enrichment. The Tribunal found that the assessee failed to rebut the statutory presumption under Section 12B that the duty incidence was passed on to the buyers. Therefore, the refund claims were deemed barred by unjust enrichment, and the Revenue's appeal was allowed.

3. Admissibility of Refund Claims on Merits:

The Tribunal also examined whether the refund claims were admissible on merits. The Revenue argued that the payment was based on the assessable value declared under Rule 173C(3) of the Central Excise Rules, and the revised price declarations filed later did not have retrospective effect. The Commissioner (Appeals) had held that Section 11B was independent of Rule 173C, allowing refund claims notwithstanding the rule. The Tribunal, however, found that the assessee did not provide evidence of issuing credit notes to buyers for the duty burden initially passed on. Therefore, the Tribunal concluded that the statutory presumption under Section 12B remained unrebutted, and the refund claims were not admissible on merits.

4. Entitlement to Interest on Refunded Amounts:

The final issue was the Revenue's appeal against the Commissioner (Appeals) allowing interest on the refunded amount of Rs. 1,07,98,905/-. The Revenue argued that since the refund itself was unsustainable, the interest granted was also unjustified. The Tribunal, having already set aside the refund order, allowed the Revenue's appeal on this ground as well.

Conclusion:

The Tribunal dismissed the assessee's appeal regarding the time-barred refund claims and allowed the Revenue's appeals concerning unjust enrichment and the inadmissibility of refund claims on merits. Consequently, the order granting interest on the refunded amount was also set aside. All appeals and the "Cross Objection" were disposed of accordingly.