2016 (5) TMI 836 - AT - Central Excise

Whether the refund claim can be sanctioned without availability of proof of payment in the shape of Original TR 6 Challan - Appellant paid duty which was acknowledged by the department - Held that - it is observer that the departmental authority have not verified from their accounts department that whether the payment has been credited in the government account or otherwise, therefore without carrying out such exercise merely in absence of original TR 6 Challan refund cannot be rejected. There are various means of ascertaining the fact of payment of duty i.e. transaction shown in the bank account of the appellant, in the account of government treasury, booking of such deposit in the books of accounts of the appellant etc. From these evidence also it can be ascertained whether the amount of excise duty has actually been credited in the government account or otherwise but no such verification or efforts has done to find out the fact on the basis of above method was carried out therefore only for want of Original TR 6 Challan rejection of the refund claim is not proper. For this reason matter needs to be remanded to the original adjudicating authority to verify payment of duty. Period of limitation - Refund claim - Duty deposited as pre-deposit at the stage of appeal - Held that - it is settled legal position that refund will arise only when issue of demand is settled. Since the demand had been confirmed by the Adjudicating authority, unless and until the said demand is set aside either by the Commissioner(Appeals) or Tribunal as the case may be, refund does not become mature. Even if, appellant files refund within the one year from the date of payment, the same is either be rejected on the ground of pre-mature or the same shall be kept pending, therefore there was no purpose of filing refund claim within the one year from the date of payment of duty. In fact duty of ₹ 49 Crores paid as pre-deposit and the same became refundable only after demand is dropped. In the present case the demand is dropped vide adjudication order dated 16/7/2007 and the refund claim was filed on 17/10/2007 i.e. well within the stipulated period from the date of Tribunal order. Therefore, the issue of time bar is in favour of the appellant in view of the judgment of Hon ble Supreme Court in case of West Coast Paper Mills Ltd 2004 (2) TMI 680 - SUPREME COURT OF INDIA , therefore the demand is not time bar. Refund claim - Unjust enrichment - Held that - duty paid much later than the clearance of the goods i.e. after issuance of show cause notice, therefore it is clear that the incidence of duty was at least not passed on to the customer, to whom the goods were supplied in respect of which duty of ₹ 49 Crores paid by the appellant. Also Revenue could not produce any evidence that the amount of ₹ 49 Crores was recovered by the appellant either from the customers, to whom goods were sold or from any other persons. There is force in the argument of the appellant that in case the price are fixed by the government as per APM, unjust enrichment is not applicable as the duty paid or payable does not influence price fixed by the government. C.A. also has given the certificate to this effect that incidence of duty paid by the appellant has not been passed on to any other persons. Though C.A. certificate alone cannot be basis of proof that there is no unjust enrichment, but in the present case C.A. certificate coupled with fact that duty paid by the appellant appears to not have been collected and the price is fixed by the government as per APM, it prima facie appears that incidence of duty was not passed on by the appellant. However it is observed that lower authority has not properly verified the above aspect therefore the same needs to be re-verified. - Appeal disposed of by way of remand

Issues Involved:

1. Whether the refund claim can be sanctioned without availability of proof of payment in the shape of Original TR 6 Challan.
2. Whether the refund is time-barred.
3. Whether the refund claim is hit by the provision of unjust enrichment.

Issue-wise Detailed Analysis:

1. Proof of Payment (Original TR 6 Challan):

The appellant claimed to have deposited Rs. 49 Crores as pre-deposit during the pendency of the appeal. The refund claim was rejected by the Assistant Commissioner on the grounds that the appellant could not submit the original duty-paying documents, i.e., TR 6 Challan, which is mandatory. The Tribunal noted that the appellant had made various correspondences with the department, which acknowledged the payment. The Tribunal held that merely in the absence of the original TR 6 Challan, the refund claim cannot be rejected. It emphasized that the department should verify from their accounts whether the amount shown in the TR 6 Challan has been credited to the government accounts. The Tribunal remanded the matter to the original adjudicating authority for verification of the payment of duty through alternative means such as bank transactions and accounting records.

2. Time-barred Issue:

The Tribunal found that the duty of Rs. 49 Crores was deposited as a pre-deposit during the appeal process concerning the dutiability of Lean Gas. It stated that the refund arises only when the issue of demand is settled. Since the demand was dropped by the Tribunal's order dated 16/7/2007, and the refund claim was filed on 17/10/2007, it was within the stipulated period from the date of the Tribunal order. The Tribunal held that the refund claim was not time-barred, supporting its decision with the judgment of the Hon'ble Supreme Court in the case of West Coast Paper Mills Ltd.

3. Unjust Enrichment:

The Tribunal observed that the duty was not paid on a consignment basis at the time of clearance of Lean Gas but was paid much later during the appeal process. It was clear that the incidence of duty was not passed on to the customers. The Tribunal noted that the Revenue could not produce any evidence to show that the amount was recovered from the customers. The appellant argued that the prices were fixed by the government according to the Administered Price Mechanism (APM), and thus, unjust enrichment was not applicable. The Tribunal found merit in this argument and noted that the C.A. certificate, coupled with the fact that the duty was not collected from the customers and the prices were government-fixed, indicated that the incidence of duty was not passed on. However, it directed the lower authority to re-verify the aspect of unjust enrichment.

Conclusion:

The Tribunal remanded the matter to the original adjudicating authority to process the refund, considering the observations made. The adjudicating authority was instructed to pass a reasoned order, giving an opportunity for a personal hearing and submission of documents by the appellant. The adjudicating authority was directed to complete the denovo adjudication within four months from the receipt of the order. The appeal was disposed of by way of remand.

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