2020 (3) TMI 368 - AT - Central Excise

Refund claim - unjust enrichment - whether the appellant has passed the test of unjust enrichment in order to claim the refund amount? - HELD THAT - It is not in dispute that the appellant has paid excess duty. The amount sanctioned has been directed to be paid to the Consumer Welfare Fund. The main ground on which the authorities below have directed the amount to be credited to the Consumer Welfare Fund is for the reason that the appellant has failed to furnish documents to show that the burden of duty has not been passed on to another. In para 6 of the Order-in-Original, the original authority has noted that the appellant has furnished all details with regard to invoices on which discounts have been claimed etc. It is also noted that they have produced the Chartered Accountant s certificate in support of their contention that the duty liability has not been passed on. The said Chartered Accountant s certificate has been rejected by the original authority holding that there is no certification of the correctness of the statements and also that the full signature of the Chartered Accountant s certificate is not endorsed in the worksheets. There are no substance in the grounds raised with regard to the Chartered Accountant s certificate. Wherever the excise duty has not been passed on to the buyer the same is noted in the work sheet. it is shown as discounts passed on which credit notes are allowed. One has to read the certificate issued by the Chartered Accountant along with worksheet. In such as case, it can be seen that only for the incidence where the duty has not been passed on to another, the appellant has claimed refund. Thus, on a perusal of the Chartered Accountant s certificate, no discrepancy found, so as to reject the same. The credit note/debit note itself would reflect the amount paid and the payments cannot be seen from the bank transactions or such other payment receipts. Therefore, the allegation that the appellant has not produced payment receipts and bank statements cannot sustain. Since both the authorities have stated that the appellants have not produced the credit note/debit note before them and only produce a detailed worksheet, the matter can be remanded to the adjudicating authority for reconsideration of documents by call of the report from range superintendent based on the detailed worksheets attached to the Chartered Accountant s certificate in order to satisfy whether the burden of duty has not been passed on - appeal allowed by way of remand.

Summary

Issues Involved:
1. Eligibility for refund claim.
2. Test of unjust enrichment.
3. Acceptance of Chartered Accountant’s certificate and credit notes.
4. Requirement of documentary evidence, including payment receipts and bank statements.
5. Treatment of refund amount in financial statements.

Detailed Analysis:

1. Eligibility for Refund Claim:
The appellants, engaged in the manufacture of tyres, tubes, and flaps, filed a refund claim of ?23,20,371/- for the period July 2016 to March 2017, based on finalization of actual discounts passed on to buyers. They argued that they had paid excess excise duty due to the provisional assessment being rejected and sought a refund for the excess duty paid.

2. Test of Unjust Enrichment:
The department rejected the refund claim on grounds of unjust enrichment, stating that the appellants failed to prove that the excise duty burden was not passed on to the buyers. The department emphasized that the appellants did not provide sufficient documentary evidence, such as accounting records showing the treatment of these transactions.

3. Acceptance of Chartered Accountant’s Certificate and Credit Notes:
The appellants submitted credit notes, debit notes, and a Chartered Accountant’s certificate to support their claim that the duty incidence was not passed on. They cited the Supreme Court's decision in CCE, Madras vs Addison & Co Ltd., where it was held that credit notes and a Chartered Accountant’s certificate are sufficient to prove that the duty incidence has not been passed on. The Tribunal found that the Chartered Accountant’s certificate and the accompanying worksheets were sufficient evidence and rejected the department’s claim that the certificate was invalid due to the lack of full signatures on the worksheets.

4. Requirement of Documentary Evidence:
The department argued that the appellants failed to provide payment receipts and bank statements to prove that the duty burden was not passed on. The Tribunal held that in cases of discounts, the practice of adjusting payments through credit and debit notes is common, and thus, bank statements or payment receipts are not necessary. The Tribunal also noted that the Chartered Accountant’s certificate and credit notes should be considered adequate evidence.

5. Treatment of Refund Amount in Financial Statements:
The department contended that the refund amount was not shown as "Receivables" in the appellants' balance sheet. The Tribunal referred to the Supreme Court’s ruling in the Addison & Co. case, which clarified that it is not always necessary for the refund amount to be reflected as "Receivables" in the balance sheet. The evidence provided through the Chartered Accountant’s certificate and credit notes is sufficient to prove that the duty burden has not been passed on.

Conclusion:
The Tribunal found that the original authorities did not consider the evidence provided by the appellants in the right manner. The Tribunal set aside the impugned order and remanded the matter to the original authority for reconsideration. The original authority was directed to review the documents, including the detailed worksheets attached to the Chartered Accountant’s certificate, and to call for a report from the range superintendent to verify whether the duty burden had not been passed on. If the report is satisfactory, the appellants would be eligible for the refund.