2017 (1) TMI 85 - AT - Central Excise

Refund - unjust enrichment - Held that - as per the judgment of Larger Bench of the Supreme Court in the case of Addison & Co Ltd. 2016 (8) TMI 1071 - SUPREME COURT wherein it was held that if the credit note is issued in respect of duty already paid to the buyer, the incidence of such duty does not stand passed on to any other person. As regards the sales tax matter pending before the sales tax appellate authority we are of the view that the adjudicating authority can take an affidavit from the appellant to the effect that in case it is held that the sales tax is not payable then the amount of sales tax paid by the appellant shall become part of the transaction value and accordingly the appellant shall return the refund amount in accordance with law - Appeal allowed by way of remand.

Summary

Issues involved:
Refund claim for excise duty attributed to sales tax, rejection based on unjust enrichment, issuance of credit notes, pending appeal with sales tax appellate authority.

Analysis:
The appellant filed a refund claim for excise duty related to sales tax paid after goods clearance. The adjudicating authority rejected the claim due to non-deduction of sales tax in invoices at clearance. However, the Commissioner (Appeals) acknowledged the appellant's non-charge of sales tax initially and subsequent payment, concluding that the burden was not passed to customers. Despite this, refund was denied citing unjust enrichment as invoice price was fully recovered. The Commissioner noted the pending appeal with the sales tax authority, deeming refund premature until that outcome.

The appellant argued that excise duty linked to sales tax, even post-clearance, is refundable under Section 4. The denial based on unjust enrichment was contested, highlighting the issuance of credit notes for duty not passed on. Reference was made to a Supreme Court ruling supporting the appellant's position. Additionally, the appellant offered to return the refund if the sales tax appeal favored the department.

The Tribunal reviewed the case, noting the Commissioner's stance on sales tax deduction and unjust enrichment. While the Commissioner ordered refund to the Consumer Welfare Fund, the Tribunal referenced a Supreme Court decision indicating that issuing credit notes for already paid duty does not pass on the incidence. Consequently, the Tribunal found the appellant entitled to the refund, as the duty burden was not transferred. The matter was remanded to the adjudicating authority for a fresh order.

Regarding the pending sales tax appeal, the Tribunal suggested obtaining an affidavit from the appellant to return the refund if sales tax was deemed non-payable. The adjudicating authority was permitted to issue a protective notice for refund recovery pending the sales tax appeal's outcome. Ultimately, the appeal was allowed for remand, emphasizing the appellant's entitlement to the refund based on the Tribunal's observations.