2014 (1) TMI 1383 - HC - Central Excise

Denial of refund claim - Availment of modvat credit - Notification No.6/2000-CE - Whether the assessee passed on the incidence of duty paid by them on tubes and tyres to their customers as provided for under Section 12-B of the Central Excise Act, 1944 - Held that - no efforts of whatsoever nature were made by the assessee in producing the additional materials/evidence before the Tribunal after the order of remand passed by this Court and confirmed by the Supreme Court. The Tribunal, therefore, did not have additional evidence/material before it to consider the claim of the assessee and in view thereof and for the reasons recorded in the impugned order held that the evidence on record is not sufficient to show that the incidence of Central Excise Duty paid on tyres and tubes, which were used in the manufacture of all four models of vehicles by the assessee, was passed on to its customers. It is necessary for the assessee who is seeking refund as contemplated by Section 11B of the Act to satisfy two conditions/circumstances namely that the applicant should be entitled for refund, and secondly, that the incidence of duty had not been passed on to the customers. While examining whether these conditions are satisfied it is necessary to bare in mind the deeming fiction in Section 12B of the Act. In the present case, it is not in dispute that the first condition stands satisfied. Therefore, what remains for us to examined is whether the incident of excise duty was passed on to the customers. Merely because, the assessee sold the vehicles at loss would not mean that the incidence of duty had not been passed on to the customers, more particularly, when the invoices issued to the customers admittedly had indicated the excise duty forming part of the price at which the vehicles were sold. If at all, the assessee suffered loss, it is clear, they suffered loss on their goods and it cannot be stated that excise duty paid by assessee was not passed on to the customers - Decided against the assessee.

Summary

Issues Involved:
1. Whether the assessee passed on the incidence of duty paid on tubes and tyres to their customers under Section 12-B of the Central Excise Act, 1944.

Detailed Analysis:

Issue 1: Passing on the Incidence of Duty

Background and Procedural History:
The appeal concerns a refund claim rejected by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The assessee, engaged in manufacturing passenger utility vehicles, had purchased tyres and tubes, availing modvat credit. Due to amendments effective from 1-3-2000, the credit of special duty was not admissible. The assessee sought a refund for the duty paid, which was initially rejected by the Adjudicating Authority and partly allowed by the Appellate Authority. However, the refund was denied on the grounds that the assessee failed to prove that the duty incidence was not passed on to customers.

Legal Questions:
The High Court framed two questions:
1. Whether CESTAT was justified in concluding that the respondent had not passed on the duty burden to buyers despite Section 12B of the Central Excise Act.
2. Whether CESTAT could ignore the effect of Section 12B.

Previous Judgments and Remand:
The High Court, in its earlier judgment, answered these questions against the assessee, emphasizing that merely producing a Cost Analysis Certificate was insufficient to prove that the duty incidence had not been passed on. The Supreme Court confirmed this view but remanded the matter to the Tribunal for fresh adjudication, allowing the assessee to present additional evidence.

Tribunal's Findings on Remand:
Upon remand, the Tribunal reviewed the certificates provided by the Cost Accountant for different vehicle models but found them insufficient. The Tribunal noted that no primary records were available for independent verification, thus concluding that the assessee failed to prove that the duty incidence had not been passed on to customers.

Relevant Provisions:
- Section 11B: Allows for a refund claim if the incidence of duty has not been passed on.
- Section 12A: Requires the duty amount to be indicated in documents related to the sale.
- Section 12B: Presumes that the duty incidence has been passed on to the buyer unless proven otherwise.

High Court's Analysis:
The High Court reiterated that the burden of proof lies with the assessee to demonstrate that the duty incidence was not passed on. Despite the opportunity provided by the remand, the assessee failed to produce any additional evidence beyond the Cost Accountant's certificates. The Court emphasized that:
- The certificates alone were not sufficient.
- The invoices indicated that excise duty was part of the sale price.
- Selling vehicles at a loss does not inherently prove that the duty incidence was not passed on.

Conclusion:
The High Court concluded that the assessee did not satisfy the burden of proof required under Section 12B. The appeal was disposed of in favor of the revenue, confirming that the incidence of duty was passed on to the customers, thereby rejecting the refund claim. There was no order as to costs.