2023 (9) TMI 352 - AT - Central Excise

Rebate claim - unjust enrichment - rejection on the ground that the export goods were manufactured using imported duty free inputs - adjudicating authority, though sanctioned the refund has ordered to credit the amount to the Consumer Welfare Fund observing that the incidence of duty has been passed on to the overseas buyer - violation of principles of natural justice - HELD THAT - It is held by the authorities below that the incidence of duty has been passed on to the foreign buyer - the logic of such view taken by the adjudicating authority that the duty has been passed on to a buyer outside India; i.e., outside the jurisdiction of the Central Excise Act, cannot be understood. This apart it is brought out from records and also explained by the Ld. counsel that the Excise duty is paid on FOB value and the export invoice reflected in the shipping bill is on CIF value. The excise duty is paid only on FOB value and therefore the appellant has not collected excise duty from the foreign buyer. After verification of the records and appreciating the evidence, it is convincing that the incidence of duty has been borne by the appellant. In such circumstances, the order passed by the authorities below directing to credit the sanctioned refund to Consumer Welfare Fund is not just and proper. The impugned order is modified to the extent of sanctioning the refund of Rs.3,01,002/- and the appellant is eligible to receive refund of this amount - Appeal allowed in part.

Summary

Issues: Rebate claim rejection, Consumer Welfare Fund credit

Rebate Claim Rejection: The appellants, engaged in manufacturing medicines, filed a rebate claim for exported goods. The claim was scrutinized, and it was found that a portion of the duty paid on exported goods was manufactured using duty-free inputs. A Show Cause Notice was issued proposing to reject the claim to the extent of the duty paid on such goods. The original authority sanctioned a rebate but ordered a portion of the amount to be credited to the Consumer Welfare Fund. The appellant challenged this order before the Tribunal.

Consumer Welfare Fund Credit: The appellant argued that they had mentioned in their rebate claim that some exported goods were manufactured using duty-free inputs and requested re-credit to their CENVAT account. The adjudicating authority, despite sanctioning the refund, directed to credit the amount to the Consumer Welfare Fund, stating that the duty incidence had been passed on to the foreign buyer. The appellant contended that they had not collected excise duty from the foreign buyer as duty was paid only on the FOB value, not included in the CIF value billed to the foreign buyer. The Tribunal agreed with the appellant, finding that the duty incidence was borne by them, and directed the refund of the contested amount, setting aside the order to credit it to the Consumer Welfare Fund.

Judgment: The Tribunal modified the impugned order, sanctioning the refund of the disputed amount to the appellant. The appeal was allowed with consequential reliefs, if any.