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2016 (8) TMI 1071 - SC - Central ExciseRefund claim - excise duty paid on additional discounts and turnover discounts - eligibility for deduction from the wholesale price for determination of value under Section 4 of the Central Excises & Salt Act, 1944 - Held that - this Court by its judgment dated 11.03.1997 in Addison & Co. Ltd. Vs. Collector of Central Excise, Madras Vs. Collector of Central Excise, Madras 1997 (3) TMI 98 - SUPREME COURT OF INDIA held that the turnover discount is an admissible deduction. This Court approved the normal practice under which discounts are given and held that the discount is known to the dealer at the time of purchase. The Additional Solicitor General submitted that any credit note that was raised post clearance will not be taken into account for the purpose of a refund by the Department. We do not agree with the said submission as it was held by this Court in Union of India Vs Bombay Tyre International Pvt. Ltd. 1983 (10) TMI 51 - SUPREME COURT OF INDIA and 1983 (11) TMI 70 - SUPREME COURT OF INDIA that trade discounts shall not be disallowed only because they are not payable at the time of each invoice or deducted from the invoice price. It is the submission of the Assessee that the turnover discount is known to the dealer even at the time of clearance which has also been upheld by this Court. It is clear from the above that the Assessee is entitled for filing a claim for refund on the basis of credit notes raised by him towards turnover discount. Unjust enrichment - incidence of duty was originally passed on to the buyer - Held that - there is no material brought on record to show that the buyer to whom the incidence of duty was passed on by the Assessee did not pass it on to any other person. There is a statutory presumption under Section 12-B of the Act that the duty has been passed on to the ultimate consumer. It is clear from the facts of the instant case that the duty which was originally paid by the Assessee was passed on. The refund claimed by the Assessee is for an amount which is part of the excise duty paid earlier and passed on. The Assessee who did not bear the burden of the duty, though entitled to claim deduction, is not entitled for a refund as he would be unjustly enriched. Refund claim - on the basis of credit notes raised by the Assessee subsequent to the sale/removal of goods - trade discounts given to its buyers including the component of excise duty - Held that - the appeals were allowed, as being squarely covered by the judgment of the Madras High Court in Addison and Company Ltd., Madras Vs. Collector of Central Excise, Madras 1997 (3) TMI 98 - SUPREME COURT OF INDIA . Refund claim - job-work - prior to 11.06.2001 the CENVAT credit admissible on the declared inputs used in the manufacture of process of man-made fibre was 45 per cent and the net duty payable on the fibre was 55 per cent of the effective duty - Assessee continued to pay the effective duty at 55 per cent for a short period between 11.06.2001 to 13.06.2001 after being a notification was issued on 11.06.2001 increasing CENVAT credit from 45 per cent to 50 per cent which resulted in the net duty payable being 50 per cent - effective duty of excise is 16 per cent and the duty payable from the personal ledger account prior to the notification dated 11.06.2001 was 8.8 per cent and after 11.06.2001 the duty payable is 8 per cent - Held that - we have already held that in the claim for refund of excess duty paid can be allowed only in case where the burden of duty has not been passed on to any other person, which includes the ultimate consumer as well. The findings in the Order-in-Original and the Order-in-Appeal are that the excise duty paid originally at the rate of 8.8 per cent was passed on from the Assessee-processor to the owner of the fabric and later to the customers. The point in this Appeal is also identical to that of Civil Appeal No. 7906 of 2002. The above appeal of the Revenue is allowed. Refund claim - excess excise duty paid at the rate of 18.11 per cent instead of 9.20 per cent - Assessee initially passed on the duty incidence to its customers. Later the Assessee returned the excess duty amount to its buyers which was evidenced by a certificate issued by the Chartered Accountant - Held that - except for a factual dispute about the genuineness of the certificate issued by the Chartered Accountant and the credit notes raised by the Assessee regarding the return of the excess duty paid by the Assessee, there is no dispute in this case of the duty being passed on to any other person by the buyer. As it is clear that the Assessee has borne the burden of duty, it cannot be said that it is not entitled for the refund of the excess duty paid. In view of the facts of this case being different from Civil Appeal No. 7906 of 2002, the appeal preferred by the Revenue is dismissed. - Decided partly in favour of Revenue
Issues Involved:
1. Entitlement to refund of excise duty. 2. Doctrine of unjust enrichment. 3. Interpretation of Section 11-B, 12-A, 12-B, and 12-C of the Central Excise Act, 1944. 4. Verification of the ultimate consumer bearing the duty burden. 5. Validity of post-clearance transactions for refund claims. Detailed Analysis: 1. Entitlement to Refund of Excise Duty: Civil Appeal No. 7906 of 2002: The respondent, a manufacturer of cutting tools, filed a refund claim for ?40,22,133/- and a supplementary claim for ?5,44,688/- towards excise duty paid on various taxes and discounts. The Department rejected the refund claim for turnover and additional discounts, arguing these were not deductible from the wholesale price under Section 4 of the Central Excises & Salt Act, 1944. The High Court of Madras ruled in favor of the Assessee, stating that the claimant only needed to show that the duty burden was not passed on to any other person, not necessarily the ultimate consumer. Civil Appeal No. 14689 of 2015: The Assessee, a manufacturer of pesticide formulations, sought a refund for trade discounts given post-sale. The High Court followed its earlier judgment in Andhra Pradesh Paper Mills Ltd., ruling in favor of the Assessee. Special Leave Petition (C) No. 25055 of 2009: The Assessee, a processor of man-made fiber, sought a refund for excess duty paid due to a notification change. The High Court ruled in favor of the Assessee, stating that the burden of proof shifted to the Revenue once the Assessee showed that the duty was not passed on to the buyer. Civil Appeal No. 8488 of 2009: The Assessee, a 100% Export Oriented Unit manufacturing cotton yarn, sought a refund for excess duty paid. The High Court ruled in favor of the Assessee, accepting the Chartered Accountant's certificate and credit notes as evidence of returning the excess duty to buyers. 2. Doctrine of Unjust Enrichment: The Supreme Court emphasized that the doctrine of unjust enrichment prevents a claimant from receiving a refund if the duty burden has been passed on to another person. The Court referred to the Mafatlal Industries Ltd. case, stating that the claimant must establish they have not passed on the duty burden to succeed in a refund claim. 3. Interpretation of Sections 11-B, 12-A, 12-B, and 12-C of the Central Excise Act, 1944: Section 11-B: The Court highlighted that a refund claim must establish that the duty incidence was not passed on to any other person. The refund amount should be credited to the Consumer Welfare Fund unless it falls under specific exceptions. Section 12-A: Mandates indicating the amount of duty paid on goods in all related documents. Section 12-B: Presumes that the duty incidence has been passed on to the buyer unless proven otherwise. Section 12-C: Establishes the Consumer Welfare Fund for crediting refund amounts not payable to claimants. 4. Verification of the Ultimate Consumer Bearing the Duty Burden: The Court held that verification is necessary to determine whether the duty burden was passed on to the ultimate consumer. If it is not possible to identify the ultimate consumer, the excess duty should remain in the Consumer Welfare Fund. 5. Validity of Post-Clearance Transactions for Refund Claims: The Court disagreed with the submission that post-clearance credit notes should not be considered for refunds. It upheld that trade discounts known at the time of sale, even if reflected post-clearance, should be considered for refund claims. Conclusion: The Supreme Court allowed the Revenue's appeals in Civil Appeal No. 7906 of 2002 and related cases, setting aside the High Court judgments and denying the Assessee's refund claims due to unjust enrichment. The appeal in Civil Appeal No. 8488 of 2009 was dismissed, allowing the Assessee's refund claim based on the evidence provided.
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