2011 (6) TMI 610 - AT - Central Excise

Captive consumption - provisional assessment - refund claims for the amounts excess paid - Held that - In the case of captive consumption and transfer of material for job work, the practice adopted by the appellant in not including the duty amount in the cost sheet cannot be the deciding factor to determine whether the appellant has passed on the burden to the customers. deemed credit taken by independent processors related to duty paid on yarn also and therefore, the excess duty paid is deemed to have been passed on to the job worker cannot be faulted in the absence of evidence to the contrary produced by the appellants. during the relevant period, the refund arising out of finalisation of provisional assessment is also subject to provisions of unjust enrichment and that the burden to prove that they have not passed on the duty incidence is on the claimant. appeals rejected

Issues:
- Provisional assessment and excess duty payments
- Refund claims and rejection by authorities
- Passing on the burden of duty to consumers
- Valuation of yarn and grey fabrics for duty payment
- Deemed credit taken by independent processors
- Unjust enrichment and burden of proof

Provisional Assessment and Excess Duty Payments:
The appellant, engaged in manufacturing yarn and fabrics, cleared yarn for captive consumption and paid duty on a provisional basis. The Assistant Commissioner finalized assessments for different periods, noting excess payments by the appellant. Refund claims were filed, but show cause notices were issued alleging lack of evidence to establish duty payment and passing on the duty burden. The original authority sanctioned a partial refund but rejected cash refund claims for other periods.

Refund Claims and Rejection by Authorities:
The appellant argued that the excess duty paid should have been adjusted towards short payments as per relevant rules. They contended that the duty burden was not passed on as cost sheets did not include the duty component. The authorities, however, upheld the rejection of refund claims, stating that the burden of proof lay with the claimant to show non-passing of duty incidence to consumers.

Passing on the Burden of Duty to Consumers:
The appellant claimed that duty on yarn was not passed on as credit to the weaving division or included in the cost of grey fabrics. However, the authorities found that the duty paid on yarn should have been factored into the cost of yarn and fabrics, especially when the grey fabrics were sent to independent processors who availed deemed credit.

Valuation of Yarn and Grey Fabrics for Duty Payment:
The Tribunal noted that the duty paid on yarn should be included in determining its cost, regardless of whether the grey fabrics were subject to excise duty. The practice of not including duty in cost sheets for captive consumption could not absolve the appellant from proving non-passing of duty burden.

Deemed Credit Taken by Independent Processors:
Independent processors availed deemed credit while discharging duty on processed fabrics. The Tribunal agreed with the authorities that the excess duty paid was deemed to have been passed on to the job worker in the absence of evidence to the contrary.

Unjust Enrichment and Burden of Proof:
During the relevant period, refund arising from finalization of provisional assessment was subject to unjust enrichment provisions. The burden to prove non-passing of duty incidence rested on the claimant. As the appellant failed to provide evidence to the contrary, the Tribunal upheld the decision of the Commissioner (Appeals) to reject the refund claims.

The appeals were ultimately rejected by the Tribunal, emphasizing the importance of proving non-passing of duty burden and complying with unjust enrichment provisions in refund claims related to provisional assessments.

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