2017 (5) TMI 1241 - AT - Central Excise

Refund claim - unjust enrichment - SSI exemption - amount paid by mistake in computation of rate of duty at 8% instead of 4% consequent upon exceeding of turnover of ₹ 1.5 crores - denial on the ground that the applicant had not discharged its obligation to establish that the burden of duty had not been passed on to their customers - Held that - In trade transactions, it is normal practice to issue debit notes/credit notes whenever an adjustment has to be made in the amounts specified in invoices pertaining to a transaction. In the present dispute, the existence of debit/credit notes is not in dispute; it is only the acknowledgement of the validity of these notes which is - In the absence of other evidence, the validity of debit/credit notes is not liable to be challenged. It would, therefore, appear logical and rational for the acknowledgement of the said amount as evidence of having borne the incidence of duty. Consequently, the utilisation of credit cannot also be questioned. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Claim for refund of excess duty paid by mistake due to exceeding turnover threshold; Dispute regarding passing on duty burden to customers; Validity of credit notes and debit notes as evidence; Interpretation of trade transactions documentation.

Analysis:
1. The appeal involved a claim for refund of excess duty amounting to ?80,810 paid by mistake due to exceeding the turnover threshold for small-scale industries. The dispute centered around invoice numbers and the computation of duty at 8% instead of 4%.

2. The impugned order rejected the refund claim on the grounds that the duty burden had been passed on to customers, as the entire billed amount had been collected. The appeal was filed by the Commissioner of Central Excise against the refund sanction.

3. The appellant argued that customers had refused to pay the higher duty rate, issued credit notes, and that the duty burden had not been passed on. The appeal also highlighted the importance of acknowledging credit notes as valid documentation for dues.

4. During the hearing, the Learned Authorised Representative supported upholding the first appellate authority's order.

5. The issue of the validity of credit notes and debit notes in transactions was a key point of contention. Previous court judgments were cited to support the contention that these notes are sufficient evidence that the duty burden was not passed on to customers.

6. The Revenue relied on a Tribunal decision to support its position regarding the duty burden being passed on to customers.

7. The main dispute revolved around the burden of proof regarding the duty not being passed on. The existence of debit/credit notes was acknowledged, but the validity of these notes was in question.

8. The judgment emphasized that commercial transactions commonly use debit and credit notes for adjustments, which are internationally accepted methods. The authority should not disregard such documentary evidence without substantial reason.

9. Ultimately, the appeal was deemed meritorious, and the impugned order rejecting the refund claim was set aside, restoring the decision of the original authority.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the reasoning behind the decision rendered by the Appellate Tribunal CESTAT MUMBAI.