2008 (9) TMI 359 - AT - Central Excise

Rejection of refund - It is admitted that the actual amount of duty paid on the invoice was shown and credit was taken by the job worker on that basis. - Once invoice shows the amount of duty paid and the job worker/ buyer takes credit, it is conclusive documentary evidence to show that duty element has been passed on to the buyer. If the buyer does not reimburse the duty or the seller is not able to recover it for whatever reason, the remedy is not available under Central Excise Law. Hence refund claim is barred by application of doctrine of unjust enrichment - Further; it is held that once buyer takes credit of duty paid, amount of credit taken has to be held as the duty passed has to look for alternate remedy.

Issues:
1. Rejection of refund claim of Rs. 53,30862/-.
2. Applicability of unjust enrichment.
3. Interpretation of Section 11B in relation to passing on the burden of duty.
4. Examination of relevant case laws.
5. Conclusive evidence of duty element passed on to the buyer.
6. Burden of proof on the claimant under Section 11B.
7. Admissibility of refund claim under Central Excise Law.
8. Relevance of exchange rate in refund claims.
9. Possibility of deliberate excess duty payment for refund claims.

Analysis:
1. The appeal was filed against the rejection of a refund claim amounting to Rs. 53,30862/-, where the appellant had consigned goods to job workers who availed credit of duty paid, leading to a discrepancy in duty payment and amount received due to exchange rate differences.

2. The advocate argued against unjust enrichment, stating that the burden of duty was not passed on to the customer as the appellant received less due to varying exchange rates. Cenvat credit taken by the buyer or job worker was highlighted as irrelevant for refund sanction under Section 11B, with reference to relevant case laws supporting the position.

3. The Revenue contended that refund was not admissible under the proviso clause of Section 11B(2) if the duty incidence had not been passed on. The Tribunal differentiated previous judgments, emphasizing the need for examination of unjust enrichment, which was not addressed in those cases.

4. The Tribunal referred to case laws such as Coromandel Fertilizers and Autolec Industries, noting that unjust enrichment was not examined, making those decisions irrelevant. The case of Gokak Mills Ltd. established that higher duty not passed on to the customer was presumed, emphasizing the importance of evidence in such matters.

5. Rule 3 of Cenvat Credit Rules was cited to highlight that duty paid on input or capital goods, when shown on the invoice and credited by the buyer, serves as conclusive evidence of duty element passed on. The burden of proving non-passing of duty to the buyer lies with the claimant under Section 11B.

6. The Tribunal emphasized that once the buyer takes credit of duty paid, it is considered as duty passed on, making refund claims challenging. The acceptable evidence under Section 11B would be to show that the buyer did not take credit or reversed it, indicating the duty was not transferred.

7. It was clarified that if the buyer does not reimburse the duty or the seller cannot recover it, the remedy is not available under Central Excise Law, making refund claims in such scenarios legally inadmissible.

8. Although the exchange rate discrepancy was noted, it was deemed irrelevant in the context of refund admissibility. The possibility of an assessee deliberately paying excess duty for refund claims was discussed, emphasizing the need for alternate remedies in such cases.

This comprehensive analysis of the judgment addresses the issues raised, the legal interpretations provided, and the relevant case laws cited to support the decision of the Appellate Tribunal CESTAT, Ahmedabad.

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