2015 (11) TMI 449 - AT - Central Excise

Denial of refund claim - Unjust enrichment - Demand of differential duty - issuance of credit note/ debit note in section 11B - Held that - Since the credit notes issued by the appellant to its buyer and in turn debit notes were also issued by the buyer to the appellant showing that the excess duty has been borne by the appellant as well as the benefit of duty amount has not been claimed by the buyer, the presumption of not passing on the duty incidence has been satisfied in the circumstances of the present case and as such the responsibility of proving that the incidence has not been passed on, has been duly satisfied by the appellant. Thus, in my view, the amount of refund, instead of crediting to the consumer welfare fund, be allowed to the appellant as refund. There is no prohibition/restriction in section 11B of the Act that credit note cannot be issued at a later date than the date of supply of the goods. In absence of any prohibition in the statute, denial of refund benefit to the appellant is contrary to the statutory mandates. - incidence of excess paid Central Excise duty has not been passed on by the appellant to its buyer, and thus, the doctrine of unjust enrichment is not applicable, for denying the benefit of refund. Therefore, the impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Application of doctrine of unjust enrichment for refund claim.
2. Interpretation of Section 11B of the Central Excise Act.
3. Admissibility of refund claim without concurrence of competent officer under Rule 7.
4. Applicability of Section 11C for refund of excess duty.

Analysis:
1. The case involved a dispute regarding the refund claim filed by the appellant for the excess Central Excise Duty paid on electric transformers. The appellant claimed that the duty paid was more than the final price verified by MVVNL. The Assistant Commissioner allowed the refund, stating that the doctrine of unjust enrichment did not apply as credit notes were issued for the principal amount and differential duty. However, the Commissioner (Appeals) ruled in favor of the Revenue, citing the absence of provisions for credit notes in Section 11B and lack of concurrence for provisional assessment under Rule 7. The appellant challenged this decision before the Tribunal.

2. The appellant's advocate argued that the refund application complied with Section 11B, as it was filed in the proper format with relevant documents within the specified time frame. He contended that the issuance of credit notes at a later date should not disqualify the refund claim and provided documentary evidence to support the non-passing of duty incidence to the buyer. The Tribunal noted that Section 11B places the burden on the assessee to prove that duty incidence was not passed on, which the appellant successfully demonstrated through credit and debit notes.

3. The Tribunal observed that the appellant had paid excess duty due to non-finalization of the price, which was later settled at a lower amount. The Commissioner (Appeals) denied the refund, alleging lack of evidence that excess duty was not passed on. However, the Tribunal found that the appellant had satisfied the burden of proof by showing that the duty incidence was not passed on through the issuance of credit and debit notes. The Tribunal emphasized that Section 11B does not prohibit the issuance of credit notes at a later date, and denial of refund without statutory basis is unjust.

4. The Tribunal rejected the Commissioner (Appeals) reliance on a previous Tribunal decision and highlighted a High Court ruling that clarified the inapplicability of Section 11C to refund claims under Section 11B. Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant and granting the refund without the doctrine of unjust enrichment applying.

This comprehensive analysis of the judgment highlights the key legal issues, arguments presented by both parties, and the Tribunal's reasoning leading to the final decision in favor of the appellant.