2010 (7) TMI 735 - HC - Central Excise

Refund - excess duty paid - assessee paid the duty at the rate of 16% as against 8% - customer has not paid his excess duty to the assessee he relied on a debit note raised by the customer in his name - Held that - customer is not claiming refund when he has raised a debit note when he refuses to pay excess duty claimed the only inference to be drawn is that the assessee has not received that excess duty which he has paid to the department in which event the department is bound to refund to the assessee the excess duty calculated which is not in dispute finding of the Tribunal is sound and just and does not call for interference substantial question of law raised is answered in favour of the assessee and against the revenue appeal dismissed.

Summary

Issues:
Claim for refund of excess duty paid by the assessee, Burden of proof regarding passing on of duty to customer, Interpretation of debit note as proof of payment of duty.

Analysis:
The appeal was filed by the Revenue against the order of the Appellate Tribunal granting relief to the assessee for a refund of excess duty paid. The assessee had cleared Tyre Flaps to different divisions of a company by paying duty at a higher rate. Subsequently, the duty rate was reduced, leading to an excess duty payment. The adjudicating authority and the first appellate authority rejected the refund claim, citing that the duty burden had been passed on to the customer. However, the Tribunal found that the excess duty was not passed on to the customer, as evidenced by the records. The Tribunal upheld the claim for refund, leading to the appeal by the Revenue.

The substantial question of law considered was whether the duty was passed on to the customer based on a debit note raised by the customer. The Revenue contended that the burden of proof regarding passing on of duty was on the assessee, and since no evidence was provided to show that the duty burden was not passed on, the claim should be rejected. On the other hand, the assessee argued that the mere raising of a debit note does not prove payment of duty, and the evidence showed that the customer did not pay the excess duty. The Tribunal's decision was based on the fact that the customer did not pay the excess duty, leading to the entitlement of the assessee for a refund.

The Court analyzed the evidence on record, noting that the assessee had paid excess duty and relied on a debit note raised by the customer to prove that the excess duty was not passed on. The Tribunal's decision was supported by the evidence from the accounts books, indicating that the customer did not pay the excess duty. As the department had received the excess duty and the customer did not claim a refund, the Court upheld the Tribunal's decision to grant the refund to the assessee. The substantial question of law was answered in favor of the assessee, leading to the dismissal of the appeal by the Revenue.