2017 (8) TMI 1111 - HC - Central Excise

Restoration of appeal - Sale - presumption u/s 12B of the Act - the impugned order holds that the presumption u/s 12B of the Act is not applicable as the department has no evidence to prove that the appellant has passed on incidence of duty to any other person - Held that - the definition of sale in Section 2(h) is transfer of possession from one person to another for consideration. In this case the job work is performed by Unit II of respondent/assessee for its customers on goods received from its customers. After carrying out the process the goods are again handed over possession of to customers. Therefore it would be a sale within the meaning of the Act. The person receiving possession of goods back would be similar to the person purchasing goods and would be covered by commonly understood word buyer in terms of Section 12B of the Act. The burden would be upon the respondent/assessee to rebut the presumption that the incidence of duty paid on welding electrodes has not been passed on to its customers - the impugned order of the Tribunal is unsustainable. The issue restored to the Assessing Officer to enable the respondent/assess to rebut the presumption u/s.12B of the Act in respect of duty paid on welding electrodes - appeal allowed being restored.

Summary

Issues:
Appeal challenging order under Central Excise Act, 1944; Unjust enrichment principle application; Presumption under Section 12B; Refund claim for excess excise duty paid on welding electrodes; Captive consumption and passing on of duty incidence; Interpretation of 'sale' under Section 2(h).

Analysis:
The appeal under Section 35(G) of the Central Excise Act, 1944 was filed challenging the order passed by the Central Excise Service Tax Appellate Tribunal, Mumbai. The substantial questions of law raised in the appeal pertained to the application of the unjust enrichment principle and the interpretation of Section 12B of the Act. The respondent, having two units, sought a refund of excess excise duty paid on welding electrodes, with the dispute arising from duty paid by Unit No.I being passed on to Unit No.II. The Tribunal rejected the Revenue's contention of passing on the duty incidence, citing the absence of evidence of passing on to any third party.

The Revenue argued that the Tribunal's decision ignored the principle of unjust enrichment and relevant precedents, emphasizing the application of Section 12B even in cases of captive consumption. The respondent's counsel, on the other hand, contended that Section 12B did not apply due to the absence of a buyer, as there was no sale of goods involved. The High Court analyzed the definition of 'sale' under Section 2(h) and determined that the job work performed by Unit II for its customers constituted a sale, making the customers akin to buyers under Section 12B.

The Court held that the burden lay on the respondent to rebut the presumption that the duty incidence had not been passed on to its customers. Consequently, the Tribunal's order was deemed unsustainable, and it was quashed and set aside. However, in response to the Revenue's request, the issue was restored to the Assessing Officer to allow the respondent to rebut the presumption under Section 12B regarding the duty paid on welding electrodes. The appeal was disposed of accordingly, with no costs imposed.