2012 (3) TMI 248 - HC - Central Excise

Denial of refund of duty paid under protest on ground of unjust enrichment assessee engaged in producing compounded asafoetida - not amounting to manufacturing process - revenue contended that assessee had raised the sale price and thus burden of duty has passed on to the customers - Held that - Commercial invoices clearly indicate that the customers were made known that the central excise duty is borne by the assessee and the same is not passed on to the customers. Also, assessee claimed that upward revision in sale price is on account of increase in the price of the raw materials.See Commissioner of Customs, New Delhi V/s. Organan (India) Ltd (2008 - TMI - 31607 - SUPREME COURT). Therefore, on basis of verification of evidences, order of Tribunal granting refund is upheld Decided in favor of assessee.

Summary

Issues:
1. Whether refund can be granted when a similar issue has been decided by the Hon'ble Supreme Court?
2. Whether the excise duty was passed on to the customers by the assessee?
3. Whether the assessee is entitled to a refund of the duty paid under protest?

Analysis:

Issue 1:
The appeal raised the question of whether a refund could be granted when a similar issue had been decided by the Hon'ble Supreme Court in a previous case. The appellant, engaged in producing compounded asafoetida, contended that the process did not amount to manufacturing, and excise duty was not payable on clearances. The Tribunal had previously held that no excise duty was payable, and the Supreme Court's decision was cited. The refund application was based on this premise.

Issue 2:
The central question was whether the excise duty had been passed on to the customers by the assessee. The Commissioner of Central Excise initially rejected the refund claim, stating that since the excise duty was shown separately in the invoices, it was deemed passed on to the customers. However, the Commissioner of Central Excise (Appeals) accepted the assessee's contention that no excise duty was collected from the customers. The Tribunal upheld this decision, emphasizing that the burden of proof lay with the assessee to show that the duty was not passed on.

Issue 3:
The final issue revolved around whether the assessee was entitled to a refund of the duty paid under protest. The appellate authorities, after thorough verification, concluded that the duty element had not been passed on to the customers. The invoices clearly indicated that excise duty was not included in the sale price, and the increase in prices was attributed to raw material costs, not duty inclusion. The Tribunal affirmed this finding, dismissing the revenue's appeal and ruling in favor of the assessee, allowing the refund claim.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing that the evidence presented by the assessee supported the claim that the excise duty had not been passed on to the customers. The judgment highlighted the importance of verifying evidence and documentation to determine the passing on of duty, ultimately ruling in favor of the assessee and dismissing the revenue's appeal.