2019 (1) TMI 1886 - AT - Central Excise

The amount of Central excise duty for which the refund claims have been filed by the appellant, was infact not payable by the appellant in view of the notification No. 12/2012-CE dated 17.3.2012 since all the conditions attached to this notification was fulfilled by the appellant. Thus, the project goods received by the appellant from M/s. L T(IDPL) should have been at Nil rate of Central Excise duty, but the appellant received goods from L T(IDPL) on which Central Excise duty was paid by the appellant. As a consequence, if any amount of Central Excise duty has been paid by the appellant, which is otherwise not payable then it was certainly entitled for refund of such amount. The appellant was justified in claiming the refund of Central Excise duty paid by it on procurement of certain equipment from M/s. L T IDPL under section 11B of the Central Excise Act, 1944, which otherwise were excepted from payment of Central Excise duty. Refund of Central Excise duty paid - Principles of natural justice - goods supplied by M/s. L T IDPL were fully covered by construction under international competitive bidding and same were exempted from payment of Central Excise duty - N/N. 12/2012-CE dated 17 March 2012 - HELD THAT - The Chartered Accountant certificate dated 14 March, 2016 categorically mentions that the Excise duty claimed by the appellant, was not shown as expenses in the profit and loss account of the appellant firm, and, therefore, the requirement of fulfillment of conditions with regard to unjust enrichment was fulfilled. Such a certificate was given after due examination of the books of accounts of the appellant firm. The appellant therefore, has not passed the burden of central excise duty paid by it to the project owners and thus was not hit by unjust enrichment and was entitled for refund of Central Excise duty paid by it. Appeal allowed.

Summary

Issues:
1. Refund of Central Excise duty under Notification No. 12/2012-CE.
2. Burden of proof regarding unjust enrichment.

Analysis:

Issue 1: Refund of Central Excise duty under Notification No. 12/2012-CE
The case involved the appellant, a company created for a power project, claiming a refund of Central Excise duty paid on goods procured from a related entity, L&T IDPL. The appellant argued that it was entitled to the refund as the goods were exempted from duty under Notification No. 12/2012-CE. The Commissioner (Appeals) rejected the refund claim citing unjust enrichment. However, the Tribunal noted that the duty was not payable by the appellant due to the exemption. The Tribunal referred to a Supreme Court decision allowing claims for exemption benefits at a later stage. It held that the appellant was justified in claiming the refund as the duty paid was not required. The Tribunal concluded that the appellant was entitled to the refund based on the exemption notification.

Issue 2: Burden of proof regarding unjust enrichment
The Commissioner (Appeals) rejected the refund claims on the grounds of unjust enrichment, stating that the appellant failed to prove that the duty burden was not passed on. The appellant contended that it had submitted a Chartered Accountant certificate and provided evidence that the duty burden was not transferred. The appellant argued that the project cost was determined considering the exemption and, therefore, passing on the duty burden was not possible. The Tribunal agreed with the appellant, emphasizing that the project cost was fixed after accounting for the duty exemption. The Chartered Accountant certificate confirmed that the duty amount was not shown as expenses, fulfilling the unjust enrichment condition. Consequently, the Tribunal set aside the Commissioner's order and allowed the appeal, ruling in favor of the appellant.

In conclusion, the Tribunal granted the appellant's refund claim based on the Central Excise duty exemption and rejected the unjust enrichment argument, allowing the appeal against the Commissioner's decision.