2016 (8) TMI 493 - AT - Central Excise

Refund claim - excise duty paid through credit notes on the discounts passed on to the dealers and stockists subsequent to clearances - quantum of discount not disclosed to the stockists at the time of clearance - appellant did not opt for provisional assessment - Held that - the appellant paid duty on the value including the discount that is to be allowed and therefore opting for provisional assessment is not required. The department does not dispute the discounts given and that appellant had paid duty on higher value. The purpose of provisional assessment is to safeguard revenue. The appellant has paid duty on higher value. In the impugned order the Commissioner(Appeals) referring to the Circular F.No.354/81/2000-TRU dt. 30/06/2000 has observed that the appellant has satisfied the first three parameters in the suppl mentary instructions at para 2.5)iv) of Part III but did not opt for provisional assessment. Therefore by following the Hon ble High Court of Andhra Pradesh judgment in the case of A.P. Paper Mills Ltd.Vs. CCE Vishakapatnam 2014 (3) TMI 671 - ANDHRA PRADESH HIGH COURT assessee is eligible for refund of excess duty paid on account of discounts offered after clearances. Unjust enrichment - incidence of duty has been passed on to buyers - appellant submitted a Chartered Accountant certificate showing that in the credit note duty has not been recovered and had not been passed on to the buyers - Held that - The Hon ble High Court of Karnataka in Sudhir Papers Ltd. Vs. CCE Bangalore 2011 (3) TMI 1443 - KARNATAKA HIGH COURT observed that if credit notes are raised and benefit is passed on to the customer thus not passing on the burden of excise duty the assessee is entitled to refund of the same. Therefore the appellants are entitled to refund. - Decided in favour of appellant

Summary

Issues: Refund claim for excise duty paid on discounts passed to dealers, provisional assessment requirement, unjust enrichment allegation.

Analysis:
1. Refund Claim: The appellants, cement manufacturers, filed a refund claim for excise duty paid on discounts passed to dealers through credit notes. The claim was rejected by the original authority and upheld by the Commissioner(Appeals). The appellants contended that discounts were known before clearance, and they had not recovered the duty. They argued that opting for provisional assessment was unnecessary as duty was paid on the value including the discount. The Tribunal referred to precedents and held that the claim was valid as the duty was paid on a higher value initially.

2. Provisional Assessment: The first objection raised was the failure to opt for provisional assessment due to undisclosed discount amounts to stockists. The Commissioner(Appeals) cited a circular and observed that the appellants did not opt for provisional assessment. However, the Tribunal, following precedent, ruled that the eligibility for refund is not affected by the provisional assessment status. The refund claim was filed within the prescribed time limit, making the provisional assessment criterion irrelevant.

3. Unjust Enrichment: The second objection was that the duty incidence was passed on to buyers, invoking the unjust enrichment doctrine. The appellants provided a Chartered Accountant certificate showing duty was not recovered through credit notes. Precedents were cited by the authorities, but the Tribunal distinguished cases where delays occurred in issuing credit notes. Relying on judgments, including A.P. Paper Mills Ltd., the Tribunal held that the appellants were entitled to a refund as the burden of excise duty was not passed on to the buyers through the credit notes.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and granting the appellants the refund. The decision was based on the findings related to the discount claim, provisional assessment requirement, and the unjust enrichment allegation, as supported by legal precedents and interpretations.